Sources of borrowing and fiscal multipliers

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• dc.contributor.author Priftis, Romanosca
• dc.contributor.author Zimic, Sreckoca
• dc.date.accessioned 2017-02-03T08:56:02Z
• dc.date.available 2017-02-03T08:56:02Z
• dc.date.issued 2017-09
• dc.description.abstract We find that debt-financed government spending multipliers vary considerably depending on the location of the debt holder. In a sample of 59 countries we find that government spending multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared to the case when government purchases are financed by issuing debt to home investors (residents). In a theoretical model we show that the location of the government debt holder produces these differential responses through the extent that private investment is crowded out in each case. Increasing international capital mobility of the resident private sector decreases the difference between the two types of financing, a prediction, which is also confirmed by the data. The share of rule-of-thumb workers, as well as the strength of the public good in the utility function play a key role in generating model-based fiscal multipliers, which are quantitatively comparable with those of the data.ca
• dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
• dc.format.mimetype application/pdfca
• dc.identifier.uri http://hdl.handle.net/10230/28046
• dc.language.iso engca
• dc.relation.ispartofseries ADEMU Working Paper Series;53
• 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 http://creativecommons.org/licenses/by/4.0/ca
• dc.subject.keyword Debt financing
• dc.subject.keyword Fiscal multipliers
• dc.subject.keyword Government spending
• dc.subject.keyword Magnitude restrictions
• dc.subject.keyword Small open economy
• dc.subject.keyword Structural vector autoregressions
• dc.title Sources of borrowing and fiscal multipliersca
• dc.type info:eu-repo/semantics/workingPaperca