Modelling the Fiscal Reaction Functions of the GIPS based on State-Varying Thresholds
AbstractWe extend previous literature on fiscal policy sustainability by introducing non-linear fiscal reaction functions with endogenously estimated state-varying thresholds to capture the behaviour of fiscal policy authorities during “good” and “bad” times. These thresholds vary with the level of debt, the economic cycle and an index of financial pressure.
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Bibliographic InfoPaper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 16_13.
Date of creation: Feb 2013
Date of revision:
Debt sustainability; fiscal reaction function; state-varying threshold;
Other versions of this item:
- Legrenzi, Gabriella & Milas, Costas, 2013. "Modelling the fiscal reaction functions of the GIPS based on state-varying thresholds," Economics Letters, Elsevier, vol. 121(3), pages 384-389.
- Gabriella Deborah Legrenzi & Costas Milas, 2013. "Modelling the Fiscal Reaction Functions of the GIPS Based on State-Varying Thresholds," CESifo Working Paper Series 4385, CESifo Group Munich.
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- H5 - Public Economics - - National Government Expenditures and Related Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
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