Fiscal policy and the output costs of sovereign default
- Author(s)
- Leyre Gomez-Oliveros Duran, Stefan Niemann, Paul Pichler
- Abstract
We introduce fiscal policy into a sovereign debt model with endogenous default costs and examine the implications for the determination of the output costs of default. We find that the quantitative properties of the output costs of default, and their dependence on primitives such as the elasticity of labor supply, are distinctly different depending on the margin of fiscal adjustment. The consideration of fiscal policy thus has potentially important implications for the quantitative properties of models of sovereign debt and default.
- Organisation(s)
- Department of Economics
- External organisation(s)
- European Commission, University of Essex
- Journal
- The B.E. Journal of Macroeconomics
- Volume
- 20
- No. of pages
- 11
- ISSN
- 2194-6116
- DOI
- https://doi.org/10.1515/bejm-2017-0236
- Publication date
- 12-2019
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502018 Macroeconomics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/fiscal-policy-and-the-output-costs-of-sovereign-default(60c01cfc-c68e-4b76-b3d8-303bac2023e4).html