The impact of fiscal rules on sovereign risk premia: International evidence

Thornton, John;Vasilakis, Chrysovalantis
(2017) Finance Research Letters — Vol. 20, p. 63-67 (2017)

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  • Thornton, JohnThe Business School, Bangor University, Bangor
    Author
  • Vasilakis, ChrysovalantisUCLouvain
    Author
Abstract
We examine whether adopting a numerical fiscal rule framework to guide fiscal policy helps reduce sovereign risk premia in a sample of advanced and developing countries for 1985–2012. We address the self-selection problem of policy adoption by applying propensity score matching methods. The results suggest that adopting fiscal rules reduces sovereign risk premia.
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Thornton, J., & Vasilakis, C. (2017). The impact of fiscal rules on sovereign risk premia: International evidence. Finance Research Letters, 20, 63-67. https://doi.org/10.1016/j.frl.2016.09.008 (Original work published 2017)