Record number :
1798189
Title of article :
Financial markets’ behavior around episodes of large changes in the fiscal stance
Author/Authors :
Ardagna، نويسنده , , Silvia، نويسنده ,
Issue Information :
ماهنامه با شماره پیاپی سال 2009
Pages :
19
From page :
37
To page :
55
Abstract :
Using a panel of OECD countries from 1960 to 2002, this paper shows that interest rates, particularly those of long-term government bonds, decrease when countries’ fiscal position improves and increase around periods of budget deteriorations. Stock market prices surge around times of substantial fiscal tightening and plunge in periods of very loose fiscal policy. In addition, the paper shows that results depend on countries’ initial fiscal conditions and on the type of fiscal consolidations: Fiscal adjustments that occur in country-years with high levels of government deficit, that are implemented by cutting government spending, and that generate a permanent and substantial decrease in government debt are associated with larger reductions in interest rates and increases in stock market prices.
Keywords :
Interest rates , Fiscal stabilizations , Fiscal expansions , Stock market prices
Journal title :
European Economic Review
Serial Year :
2009
Link To Document :
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