Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union

Detalhes bibliográficos
Autor(a) principal: Alves, José
Data de Publicação: 2024
Outros Autores: Wagner, Clarisse
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.5/29757
Resumo: Conditions of fiscal sustainability have been widely studied in the literature. Fiscal reaction functions or cointegration between government revenues and expenditures are two approaches that economists have been paying their attention, not only on a theoretical perspective, but also empirically assessing the sustainability of several economies during different timespans. Whereas a predominant focus has been attributed to primary deficits, little attention has been dedicated to government financial assets contribution to government debt paths. Given that government financial assets represent a large proportion of gross debt accumulation, we enquire about their role on government debt leveraging of economic growth over interest rates, focusing on a channel of gross debt, investment, external balance and ratings, in 27 European Union economies during the period from 2000 to 2022. Large heterogeneities in the statistical characteristics of the series and impacts of financial assets on interest rate-growth rate differentials call for a closer attention to financial assets on a granular approach at individual country level, rather than on the aggregate. Our results highlight the importance of government financial assets holdings to the short and long-run debt trajectories, enhancing or potentially undermining gains from primary deficits consolidation efforts and consequently on the differentials between interest rates and output growth.
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spelling Leveraging interest-growth differentials : hidden effects of government financial assets in the European UnionPublic debtStock Flow AdjustmentsFinancial Assets HoldingsARDLPMGConditions of fiscal sustainability have been widely studied in the literature. Fiscal reaction functions or cointegration between government revenues and expenditures are two approaches that economists have been paying their attention, not only on a theoretical perspective, but also empirically assessing the sustainability of several economies during different timespans. Whereas a predominant focus has been attributed to primary deficits, little attention has been dedicated to government financial assets contribution to government debt paths. Given that government financial assets represent a large proportion of gross debt accumulation, we enquire about their role on government debt leveraging of economic growth over interest rates, focusing on a channel of gross debt, investment, external balance and ratings, in 27 European Union economies during the period from 2000 to 2022. Large heterogeneities in the statistical characteristics of the series and impacts of financial assets on interest rate-growth rate differentials call for a closer attention to financial assets on a granular approach at individual country level, rather than on the aggregate. Our results highlight the importance of government financial assets holdings to the short and long-run debt trajectories, enhancing or potentially undermining gains from primary deficits consolidation efforts and consequently on the differentials between interest rates and output growth.ISEG - REM - Research in Economics and MathematicsRepositório da Universidade de LisboaAlves, JoséWagner, Clarisse2024-01-10T14:32:44Z2024-012024-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/29757engAlves, José e Clarisse Wagner (2024). "Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union". REM Working paper series, nº 0307/20242184-108Xinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-01-14T01:32:06Zoai:www.repository.utl.pt:10400.5/29757Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T01:40:27.483998Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
title Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
spellingShingle Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
Alves, José
Public debt
Stock Flow Adjustments
Financial Assets Holdings
ARDL
PMG
title_short Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
title_full Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
title_fullStr Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
title_full_unstemmed Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
title_sort Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union
author Alves, José
author_facet Alves, José
Wagner, Clarisse
author_role author
author2 Wagner, Clarisse
author2_role author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Alves, José
Wagner, Clarisse
dc.subject.por.fl_str_mv Public debt
Stock Flow Adjustments
Financial Assets Holdings
ARDL
PMG
topic Public debt
Stock Flow Adjustments
Financial Assets Holdings
ARDL
PMG
description Conditions of fiscal sustainability have been widely studied in the literature. Fiscal reaction functions or cointegration between government revenues and expenditures are two approaches that economists have been paying their attention, not only on a theoretical perspective, but also empirically assessing the sustainability of several economies during different timespans. Whereas a predominant focus has been attributed to primary deficits, little attention has been dedicated to government financial assets contribution to government debt paths. Given that government financial assets represent a large proportion of gross debt accumulation, we enquire about their role on government debt leveraging of economic growth over interest rates, focusing on a channel of gross debt, investment, external balance and ratings, in 27 European Union economies during the period from 2000 to 2022. Large heterogeneities in the statistical characteristics of the series and impacts of financial assets on interest rate-growth rate differentials call for a closer attention to financial assets on a granular approach at individual country level, rather than on the aggregate. Our results highlight the importance of government financial assets holdings to the short and long-run debt trajectories, enhancing or potentially undermining gains from primary deficits consolidation efforts and consequently on the differentials between interest rates and output growth.
publishDate 2024
dc.date.none.fl_str_mv 2024-01-10T14:32:44Z
2024-01
2024-01-01T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.5/29757
url http://hdl.handle.net/10400.5/29757
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Alves, José e Clarisse Wagner (2024). "Leveraging interest-growth differentials : hidden effects of government financial assets in the European Union". REM Working paper series, nº 0307/2024
2184-108X
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
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dc.publisher.none.fl_str_mv ISEG - REM - Research in Economics and Mathematics
publisher.none.fl_str_mv ISEG - REM - Research in Economics and Mathematics
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