Modelling the Fiscal Reaction Functions of the GIPS based on State-Varying Thresholds
Gabriella Legrenzi () and
Costas Milas ()
Working Paper series from Rimini Centre for Economic Analysis
We extend previous literature on fiscal policy sustainability by introducing non-linear fiscal reaction functions with endogenously estimated state-varying thresholds to capture the behaviour of fiscal policy authorities during "good" and "bad" times. These thresholds vary with the level of debt, the economic cycle and an index of financial pressure.
Keywords: Debt sustainability; fiscal reaction function; state-varying threshold (search for similar items in EconPapers)
JEL-codes: C2 H3 H5 (search for similar items in EconPapers)
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Journal Article: Modelling the fiscal reaction functions of the GIPS based on state-varying thresholds (2013)
Working Paper: Modelling the Fiscal Reaction Functions of the GIPS Based on State-Varying Thresholds (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:16_13
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