TY  - UNPD
A1  - Born, Benjamin
A1  - Müller, Gernot J.
A1  - Pfeifer, Johannes
T1  - Does austerity pay off?
T2  - SAFE working paper series ; No. 77
N2  - Policy makers often implement austerity measures when the sustainability of public finances is in doubt and, hence, sovereign yield spreads are high. Is austerity successful in bringing about a reduction in yield spreads? We employ a new panel data set which contains sovereign yield spreads for 31 emerging and advanced economies and estimate the effects of cuts of government consumption on yield spreads and economic activity. The conditions under which austerity takes place are crucial. During times of fiscal stress, spreads rise in response to the spending cuts, at least in the short-run. In contrast, austerity pays off, if conditions are more benign.
T3  - SAFE working paper - 77 
KW  - fiscal policy
KW  - austerity
KW  - sovereign risk
KW  - yield spreads
KW  - confidence
KW  - panel VAR
KW  - local projections
KW  - fiscal stress
Y1  - 2014
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/36136
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-361365
UR  - http://safe-frankfurt.de/fileadmin/user_upload/editor_common/Research/Working_Paper/SAFE_WP_77.pdf
IS  - December 1, 2014
PB  - SAFE
CY  - Frankfurt am Main
ER  -