Modelling the Fiscal Reaction Functions of the GIPS based on State-Varying Thresholds

We extend previous literature on fiscal policy sustainability by introducing non-linear fiscal reaction functions with endogenously estimated state-varying thresholds to capture the behaviour of fiscal policy authorities during “good” and “bad” times. These thresholds vary with the level of debt, the economic cycle and an index of financial pressure.

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Year of publication:	2013-02
Authors:	Legrenzi, Gabriella ; Milas, Costas
Institutions:	Rimini Centre for Economic Analysis (RCEA)
Subject:	Debt sustainability \| fiscal reaction function \| state-varying threshold

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Extent:	application/pdf
Series:	Working Paper Series.
Type of publication:	Book / Working Paper
Classification:	C2 - Econometric Methods: Single Equation Models ; H3 - Fiscal Policies and Behavior of Economic Agents ; H5 - National Government Expenditures and Related Policies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010656013