Financial globalization and the raising of public debt
Marina Azzimonti (),
Eva de Francisco () and
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Vincenzo Quadrini: Department of Economics, University of Southern California
No 2011-03, Working Papers from Towson University, Department of Economics
During the last three decades the stock of government debt has increased in most developed countries. During the same period inter- national capital markets have been liberalized. In this paper we de- velop 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.
New Economics Papers: this item is included in nep-dge and nep-fdg
Date: 2011-03, Revised 2011-03
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Working Paper: Financial globalization and the raising of public debt (2011)
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