Financial globalization and the raising of public debt

Vincenzo Quadrini, Eva de Francisco () and Marina Azzimonti

No 575, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: During the last three decades the stock of government debt has increased in most developed countries. During the same period international capital markets have been liberalized. In this paper we develop a two-country political economy model with incomplete markets and endogenous government borrowing and show that countries choose higher levels of public debt when nancial markets are internationally integrated.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:575

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More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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