Asset returns and government budgets in a small open economy

Chapter 25 Government debt

“…Plosser (1982) pioneered the approach of measuring expected policy using vector autoregressions. Further work in this vein by Plosser (1987), Evans (1987aEvans ( , 1987b, and Boothe and Reid (1989) has confirmed Plosser's original conclusion that a zero effect of deficits cannot be 30 Different sorts of analyses by Evans (1985), Hoelscher (1986), and Wachtel and Young (1987) have reached mixed conclusions. 31 For example, Plosser (1987, table 10) reports sharply different coefficient estimates during the 1968-76 and 1977-85 sample periods and using monthly data as opposed to quarterly data.…”

Coordination between the monetary and public debt management policies in Croatia

“…Evans (1985) and Barro (1997), for example, argue that budget deficit and public debt do not have any significant impact on either the nominal or real interest rates. Similarly, Boothe and Reid (1989) conclude that there is no significant positive correlation between fiscal deficit and interest rates. Barro (1997) suggests that the growth of public spending, regardless of whether it is financed through tax increases or public debt, will not affect other economic variables (aggregate demand or interest rates), because it will be offset by growing private savings 1 .…”

Fiscal and Monetary Nexus in Emerging Market Economies: How Does Debt Matter?

“…13 See Easterly et al (1994), and Agenor and Montiel (1996), For industrial countries, empirical studies on the relationship between fis cal policy and interest rates have found mixed results. For example, Plosser (1982Plosser ( , 1987, Boothe and Reid (1989), and Evans (1985, 1987a do not find any significant relationship between fiscal deficits and interest rates, whereas Wachtel and Young (1987), Ford and Laxton (1999), Kitchen (1996), Elmendorf (1996), and Canzoneri et al (2002) find that budget deficits have a significant impact on interest rates. 14 For industrial countries the evidence on the impact of fiscal policy on exchange rate movements is mixed.…”