Publication:
The Global Dimension to Fiscal Sustainability

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Date
2011
ISSN
01640704
Published
2011
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Abstract
This paper provides a new perspective of fiscal sustainability and financial globalization in emerging and industrial countries. We highlight the importance of global capital market shocks for fiscal sustainability, a relationship which has hitherto been ignored in the empirical literature. Using a factor model we demonstrate that the relationship between deficit and debt is conditional upon a global factor and we suggest that this global factor is related to world-wide liquidity. We also demonstrate that this acts as a constraint on emerging market economies' fiscal policy.
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https://hdl.handle.net/10986/5483
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http://dx.doi.org/10.1016/j.jmacro.2011.01.002
http://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=1239893&site=ehost-live
http://www.elsevier.com/wps/find/journaldescription.cws_home/622617/description#description
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