Fiscal Discipline and the Cost of Public Debt Service
Author | : Mr.Francesco Caselli |
Publisher | : International Monetary Fund |
Total Pages | : 23 |
Release | : 1998-04-01 |
ISBN-10 | : 9781451969269 |
ISBN-13 | : 1451969260 |
Rating | : 4/5 (69 Downloads) |
Book excerpt: Is there any systematic explanation of variations in the cost of debt servicing over time and across countries? This paper examines the influence of fiscal variables on borrowing costs in a panel of OECD countries, showing that these variables have a significant role. In particular, an improvement of the primary fiscal balance is associated with a significant reduction in debt-servicing costs, amplifying the effects of primary adjustment on the fiscal position. A significant country-specific component remains, however; several explanations for this component are discussed, including debt management and market infrastructure.