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Title: Fiscal policy and interest rates: the role of financial and economic integration
Author: Claeys, Peter Gunther
Moreno Serrano, Rosina
Suriñach Caralt, Jordi
Keywords: Política fiscal
Cicle de vida del producte
Deute públic
Anàlisi d'impacte econòmic
Fiscal policy
Product life cycle
Public debt
Economic impact analysis
Issue Date: 2008
Publisher: Universitat de Barcelona. Institut de Recerca en Economia Aplicada Regional i Pública
Series/Report no: [WP E-IR08/10]
Abstract: It is commonly believed that a fiscal expansion raises interest rates. However, these crowding out effects of deficits have been found to be small or non-existent. One explanation is that financial integration offsets interest rate differentials on globalised bond markets. This paper measures the degree of integration of government bond markets, using spatial modelling techniques to take this spillover on financial markets into account. Our main finding is that the crowding out effect on domestic interest rates is significant, but is reduced by spillover across borders. This spillover is important in major crises or in periods of coordinated policy actions. This result is generally robust to various measures of cross-country linkages. We find spillover to be much stronger among EU countries.
Note: Reproducció del document publicat a:
It is part of: IREA – Working Papers, 2008, IR08/10
ISSN: 2014-1254
Appears in Collections:Documents de treball (Institut de Recerca en Economia Aplicada Regional i Pública (IREA))
Documents de treball / Informes (Econometria, Estadística i Economia Aplicada)

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