Sovereign Indebtedness and Financial and Fiscal Conditions
Antonio Afonso and
Joao Jalles ()
No 2019/0111, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa
We empirically assess the magnitudes of sovereign indebtedness responses for a sample of 123 Advanced and Emerging Market Economies, between 1980 and 2018, taking into account the changing characteristics of inancial markets, notably the Global and Financial Crisis. Our results show that when the financial conditions are more stressful, for instance, higher yield spreads or a heightened degree of financial stress, fiscal authorities use more actively their primary balance to reduce sovereigns indebtedness, which is not the case when financial market conditions are more benign. This is notably true for the case of Emerging Market Economies sovereigns, who most likely then struggle more to fund themselves.
Keywords: sovereing indebtdness; panel data; financial stress; global financial crisis; emerging markets (search for similar items in EconPapers)
JEL-codes: C23 G15 H63 (search for similar items in EconPapers)
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Journal Article: Sovereign indebtedness and financial and fiscal conditions (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp01112019
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