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dc.contributor.authorSchaltegger, Christoph A.en_US
dc.contributor.authorWeder, Martinen_US
dc.date.accessioned2011-01-26en_US
dc.date.accessioned2011-06-29T11:15:30Z-
dc.date.available2011-06-29T11:15:30Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/46324-
dc.description.abstractWe use a panel of 21 OECD countries from 1970 to 2009 to investigate the effects of different fiscal adjustment strategies on long-term interest rates - a key fiscal indicator reflecting the costs of government debt service. A government confronted with high deficits and rising debt will sooner or later need to enact fiscal adjustments in order to avoid solvency problems. Over the last four decades, such measures taken by governments in OECD countries have varied in duration, size, composition and in their success to re-establish fiscal sustainability. Controlling for various economic, fiscal and political factors, we find that the size and the composition of a fiscal adjustment significantly affect interest rates as well as yield spreads. Adjustments that are relatively large and those that primarily depend on expenditure cuts lead to substantially lower long-term interest rates. However, periods of fiscal adjustments do not generally have an influence on interest rates, even if they were successful and led to lower deficits and debt levels. Instead, financial markets only seem to value strict and decisive measures - a clear sign that the government's pledge to cut the deficit is credible.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo working paper: Public Finance 3297en_US
dc.subject.jelE62en_US
dc.subject.jelH00en_US
dc.subject.jelH60en_US
dc.subject.ddc330en_US
dc.subject.keywordfiscal adjustmenten_US
dc.subject.keywordconsolidation policyen_US
dc.subject.keywordgovernment debten_US
dc.subject.keyworddeficiten_US
dc.subject.keywordinterest ratesen_US
dc.subject.stwHaushaltskonsolidierungen_US
dc.subject.stwNachhaltigkeiten_US
dc.subject.stwZinsen_US
dc.subject.stwVolatilitäten_US
dc.subject.stwÖffentliche Schuldenen_US
dc.subject.stwOECD-Staatenen_US
dc.titleFiscal adjustment and the costs of public debt service: Evidence from OECD countriesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn644652225en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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