Public financing under balanced budget rules

IF 2.3 3区 经济学 Q2 ECONOMICS
Minjie Deng , Chang Liu
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引用次数: 0

Abstract

This paper analyzes the impact of a balanced budget rule (BBR) on government financing costs and its implications for the government balance sheet. Exploiting the variation in BBR implementation across US states, we find that states with more stringent BBRs exhibit significantly lower bond spreads and credit default swap spreads, demonstrating the crucial role of default risk. A sovereign default model, which features long-term debt, endogenous investment and output, as well as a BBR, aligns with the empirical result. Calibrated to Illinois, our quantitative analysis suggests that implementing a BBR could dramatically decrease the state bond spread, gradually lower the debt, and improve welfare in the long run.
平衡预算规则下的公共筹资
本文分析了平衡预算规则(BBR)对政府融资成本的影响及其对政府资产负债表的影响。利用美国各州BBR实施的差异,我们发现,BBR实施更严格的州,债券息差和信用违约互换息差明显更低,证明了违约风险的关键作用。以长期债务、内生投资和产出以及BBR为特征的主权违约模型与实证结果一致。以伊利诺伊州为例,我们的定量分析表明,实施BBR可以大幅降低国债息差,逐步降低债务,并从长远来看改善福利。
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来源期刊
CiteScore
3.30
自引率
0.00%
发文量
69
期刊介绍: Review of Economic Dynamics publishes meritorious original contributions to dynamic economics. The scope of the journal is intended to be broad and to reflect the view of the Society for Economic Dynamics that the field of economics is unified by the scientific approach to economics. We will publish contributions in any area of economics provided they meet the highest standards of scientific research.
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