Based on a panel of 24 OECD countries this present paper shows that the total government sector is contracted by Baumol’s cost disease. The most affected government services are education and healthcare. Furthermore, this paper shows that Baumol’s cost disease produces adverse consequences under a balanced budget rule such as a debt brake, which is a key element of the EU Fiscal Compact. Govern...

A windfall of natural resource revenue (or foreign aid) faces government with choices of how to manage public debt, investment, and the distribution of funds for consumption, particularly if the windfall is both anticipated and temporary. We show that the permanent income hypothesis prescription of an ever-lasting increase in consumption financed by borrowing ahead of the windfall and then accu...

This paper presents a framework for assessing the fiscal condition index (FCI) and develops a concept to assess fiscal condition of governments and implements it into Iran government as an oil exporting country. The concept consists of four dimensions ­-revenue, expenditure, budget balance, and debt structure-and each dimension has its own indicators. There are seven indicators examined namely ...

In this paper I test two models of strategic debt behavior. The general idea is that if a government anticipates the possibility of defeat in the next election it will try to use the debt strategically in order to influence the policy of its successor. Previous empirical studies have either rejected the strategic explanation of debt or have not been able to isolate this effect. I argue that the...

Fang, Xiang, Shanming Hu, Bingkun Xu, Gary D. Snyder, Shawn Harmon, Jianrong Yao, Yi Liu, Bhavani Sangras, J. R. Falck, Neal L. Weintraub, and Arthur A. Spector. 14,15-Dihydroxyeicosatrienoic acid activates peroxisome proliferator-activated receptor. Am J Physiol Heart Circ Physiol 290: H55–H63, 2006. First published August 19, 2005; doi:10.1152/ajpheart.00427.2005.— Epoxyeicosatrienoic acids (...

I document that government debt is related to risk premia in various asset markets: (i) the debt-to-GDP ratio positively predicts excess stock returns with out-of-sample R2 up to 30% at a five-year horizon, outperforming many popular predictors; (ii) the debt-to-GDP ratio is positively correlated with credit risk premia in both corporate bond excess returns and yield spreads; (iii) higher debt-...

We propose a hierarchical Marshall-Olkin model of countrywide systemic risk. At the lower level, we model the systemic risk of a crisis within the banking system (that we call “within” systemic risk) and at the higher level we model the probability of a joint default of the banking system and the public sector (that we call “between” systemic risk). As for the within systemic risk, we propose a...

The stock of sovereign debt is typically measured at face value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different contractual forms or maturities. In this paper, we construct alternative measures of the stock of external sovereign debt for 100 developing countries from 1979 through 2006 that correct for differences i...

The study observes the size of Spanish State by analyzing composition public spending policies in Public Budget for years 2007-2012. government expenditure (central State, autonomous communities and local authorities) has not been reduced to level required achieve control debt. Furthermore, fiscal adjustment must be done without tax increases because they are harmful dynamic efficiency economy....