Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries

Author/Editor:

Francesco Caselli

Publication Date:

April 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1998/055

Subject:

Debt service Debt sustainability analysis Fiscal stance Inflation Public debt

English

Publication Date:

April 1, 1998

ISBN/ISSN:

9781451969269/1018-5941

Stock No:

WPIEA0551998

Pages:

22

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