Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries

22 Pages Posted: 15 Feb 2006

See all articles by Francesco Caselli

Francesco Caselli

London School of Economics & Political Science (LSE) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: April 1998

Abstract

Is there any systematic explanation of variations in the cost of debt servicing over time and across countries? This paper examines the influence of fiscal variables on borrowing costs in a panel of OECD countries, showing that these variables have a significant role. In particular, an improvement of the primary fiscal balance is associated with a significant reduction in debt-servicing costs, amplifying the effects of primary adjustment on the fiscal position. A significant country-specific component remains, however; several explanations for this component are discussed, including debt management and market infrastructure.

Keywords: Public debt, fiscal policy

JEL Classification: E62, H63

Suggested Citation

Caselli, Francesco and Lane, Timothy, Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries (April 1998). IMF Working Paper, Vol. , pp. 1-22, 1998. Available at SSRN: https://ssrn.com/abstract=882318

Francesco Caselli (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States
202-623-7648 (Phone)
202-623-4405 (Fax)

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