The Crime of Fiscal Neglect and Punishment of High Rates – A Panel Study for EMU
(2016) NEKN01 20161Department of Economics
- Abstract (Swedish)
- This paper examines long-term interest rates and fiscal liabilities within EMU in the
context of the recent sovereign debt crisis; where Greece, Ireland, Italy, Portugal and
Spain faced rising interest rates in contrast to the rest of the EMU. An assessment of the
short and long-run properties of long rates, fiscal deficits and government debt are
estimated for 11 EMU countries in the time span 1999-2015. This is done through
different fixed-effects models, 2SLS and Panel-DOLS. No long-run relationship between
the variables is found. Results also show that fiscal deficits have a positive effect on long
rates and the interaction between deficits and debt enhance the overall impact on rates,
in particular to fiscally vulnerable... (More) - This paper examines long-term interest rates and fiscal liabilities within EMU in the
context of the recent sovereign debt crisis; where Greece, Ireland, Italy, Portugal and
Spain faced rising interest rates in contrast to the rest of the EMU. An assessment of the
short and long-run properties of long rates, fiscal deficits and government debt are
estimated for 11 EMU countries in the time span 1999-2015. This is done through
different fixed-effects models, 2SLS and Panel-DOLS. No long-run relationship between
the variables is found. Results also show that fiscal deficits have a positive effect on long
rates and the interaction between deficits and debt enhance the overall impact on rates,
in particular to fiscally vulnerable countries. Unexpectedly, government debt show a
negative effect on interests, a result explained in the context of ECB’s role as lender of
last resort and the asymmetric effects among EMU members. In conclusion, results
suggest a subjective punishment for fiscal inadequacy through long-term rates. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8895030
- author
- Ahlqvist, Victor LU
- supervisor
- organization
- course
- NEKN01 20161
- year
- 2016
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- EMU, Long-term Interest Rates, Government Debt, Fiscal Deficits, GIIPS
- language
- English
- id
- 8895030
- date added to LUP
- 2017-01-19 15:41:07
- date last changed
- 2017-01-19 15:41:07
@misc{8895030, abstract = {{This paper examines long-term interest rates and fiscal liabilities within EMU in the context of the recent sovereign debt crisis; where Greece, Ireland, Italy, Portugal and Spain faced rising interest rates in contrast to the rest of the EMU. An assessment of the short and long-run properties of long rates, fiscal deficits and government debt are estimated for 11 EMU countries in the time span 1999-2015. This is done through different fixed-effects models, 2SLS and Panel-DOLS. No long-run relationship between the variables is found. Results also show that fiscal deficits have a positive effect on long rates and the interaction between deficits and debt enhance the overall impact on rates, in particular to fiscally vulnerable countries. Unexpectedly, government debt show a negative effect on interests, a result explained in the context of ECB’s role as lender of last resort and the asymmetric effects among EMU members. In conclusion, results suggest a subjective punishment for fiscal inadequacy through long-term rates.}}, author = {{Ahlqvist, Victor}}, language = {{eng}}, note = {{Student Paper}}, title = {{The Crime of Fiscal Neglect and Punishment of High Rates – A Panel Study for EMU}}, year = {{2016}}, }