Modelling the fiscal reaction functions of the GIPS based on state-varying thresholds

We introduce 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 a financial pressure index.

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Year of publication:	2013
Authors:	Legrenzi, Gabriella ; Milas, Costas
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 121.2013, 3, p. 384-389
Publisher:	Elsevier
Subject:	Debt sustainability \| Fiscal reaction function \| State-varying threshold

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Type of publication:	Article
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/10011041873