Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/82112 
Year of Publication: 
2010
Series/Report no.: 
EPRU Working Paper Series No. 2010-11
Publisher: 
University of Copenhagen, Economic Policy Research Unit (EPRU), Copenhagen
Abstract: 
Does fiscal governance affect government borrowing costs? We operationalize fiscal governance as the ability of governments to pass a budget on time and, using a unique data set on budget enactment dates, analyze the effect of such late budgets on government bond yield spreads. Based on a sample of 36 US states in the period 1988-1997, we estimate that a budget delay of 30 days has a long run impact on the yield spread between 2 and 10 basis points. States with sufficient liquidity in the form of large reserves face small or no costs from late budgets.
Subjects: 
fiscal governance
political deadlock
late budgets
fiscal stalemate
Chubb relative value survey
debt cost
bond spreads
JEL: 
H72
H61
H63
Document Type: 
Working Paper

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