Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries
April 1, 1998
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Summary
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.
Subject: Debt service, Debt sustainability analysis, Fiscal stance, Inflation, Public debt
Keywords: cost, debt, debt dynamics, WP
Pages:
22
Volume:
1998
DOI:
Issue:
055
Series:
Working Paper No. 1998/055
Stock No:
WPIEA0551998
ISBN:
9781451969269
ISSN:
1018-5941
