Sovereign Risk, Fiscal Policy, and Macroeconomic Stability; by Giancarlo Corsetti, Keith Kuester, Andre Meier, and Gernot J. Mueller; IMF Working Paper 12/33; January 1, 2012

Abstract

This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a “sovereign risk channel” through which sovereign default risk raises funding costs in the private sector. If monetary policy is constrained, the sovereign risk… (More)

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Cite this paper

@inproceedings{Corsetti2012SovereignRF, title={Sovereign Risk, Fiscal Policy, and Macroeconomic Stability; by Giancarlo Corsetti, Keith Kuester, Andre Meier, and Gernot J. Mueller; IMF Working Paper 12/33; January 1, 2012}, author={Giancarlo Corsetti and Keith Kuester and A. Meier and Gernot J. Mueller and Fabian Bornhorst and Hafedh Bouakez and Antonio Fatas and Philip K Lane and Thomas Laubach and Daniel Y Leigh and Ludger Schuknecht}, year={2012} }