Ontology highlight
ABSTRACT:
SUBMITTER: Jiang M
PROVIDER: S-EPMC10358995 | biostudies-literature | 2023
REPOSITORIES: biostudies-literature
PloS one 20230720 7
The coronavirus pandemic has revived interest in the effects of fiscal policy. This paper studies the effects of government spending on default risk in emerging economies. We first build a general equilibrium small open economy model where government spending shocks influence external debt and sovereign bond spreads. We show that external debt piles up and sovereign bond spreads increase following a government spending shock. We then develop VAR evidence based on a panel of 18 countries. We find ...[more]