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Fiscal policy and the output costs of sovereign default

Gomez-Oliveros Duran, Leyre and Niemann, Stefan and Pichler, Paul (2020) 'Fiscal policy and the output costs of sovereign default.' B.E. Journal of Macroeconomics, 20 (1). ISSN 1935-1690

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Abstract

We introduce fiscal policy into a sovereign debt model with endogenous default costs and examine the implications for the determination of the output costs of default. We find that the quantitative properties of the output costs of default, and their dependence on primitives such as the elasticity of labor supply, are distinctly different depending on the margin of fiscal adjustment. The consideration of fiscal policy thus has potentially important implications for the quantitative properties of models of sovereign debt and default.

Item Type: Article
Uncontrolled Keywords: scal policy; sovereign debt; output costs of default
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 15 Nov 2019 10:51
Last Modified: 06 Jan 2022 14:07
URI: http://repository.essex.ac.uk/id/eprint/25932

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