Does austerity pay off?
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- dc.contributor.author Born, Benjaminca
- dc.contributor.author Müller, Gernot J.ca
- dc.contributor.author Pfeifer, Johannesca
- dc.date.accessioned 2016-04-27T16:01:59Z
- dc.date.available 2016-04-27T16:01:59Z
- dc.date.issued 2016-04-27
- dc.description.abstract We investigate if a reduction of government consumption lowers the sovereign default premium. For this purpose we build a new data set for 38 emerging and developed economies. Results vary along three dimensions. First, the time horizon: the premium declines, but only in the long run. Second, initial conditions: the premium increases in the short run, but only if it is already high. Third, size: the short-run response of the premium increases disproportionately as government consumption is reduced. We rationalize these findings in a structural model of optimal sovereign default where default risk is priced in an actuarially fair manner.ca
- dc.format.mimetype application/pdfca
- dc.identifier.uri http://hdl.handle.net/10230/26191
- dc.language.iso engca
- dc.relation.ispartofseries Ademu Working Papers Series;4
- dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
- dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
- dc.subject.keyword Fiscal policyen
- dc.subject.keyword Austerityen
- dc.subject.keyword Sovereign risken
- dc.subject.keyword Default premiumen
- dc.subject.keyword Local projectionsen
- dc.subject.keyword Panel VARen
- dc.subject.keyword Fiscal stressen
- dc.title Does austerity pay off?ca
- dc.type info:eu-repo/semantics/workingPaperca