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Financial globalization and the raising of public debt

Author

Listed:
  • Marina Azzimonti

    (Federal Reserve Bank of Philadelphia)

  • Eva de Francisco

    (Department of Economics, Towson University)

  • Vincenzo Quadrini

    (Department of Economics, University of Southern California)

Abstract

During the last three decades the stock of government debt has increased in most developed countries. During the same period inter- national capital markets have been liberalized. In this paper we de- velop a two-country political economy model with incomplete markets and endogenous government borrowing and show that countries choose higher levels of public debt when nancial markets are internationally integrated.

Suggested Citation

  • Marina Azzimonti & Eva de Francisco & Vincenzo Quadrini, 2011. "Financial globalization and the raising of public debt," Working Papers 2011-03, Towson University, Department of Economics, revised Mar 2011.
  • Handle: RePEc:tow:wpaper:2011-03
    as

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    File URL: http://webapps.towson.edu/cbe/economics/workingpapers/2011-03.pdf
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    References listed on IDEAS

    as
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    1. Can DSGE models describe political cohesion?
      by Jason Rave in Macro Matters on 2012-05-29 02:41:00

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    Cited by:

    1. Martin, Fernando M., 2015. "Debt, inflation and central bank independence," European Economic Review, Elsevier, vol. 79(C), pages 129-150.

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