Abstract
We examine the possible interactions of the financial cycle andfiscal position for G7 economies. We employ the innovative aggre-gate financial and fiscal stress indexes which are able to depict theperplexed nature of modern economies. A SVAR model is devel-oped to investigate the effects of both financial and fiscal stresson key macroeconomic variables. The results, using two differentidentification methods, reveal that financial and fiscal shocks affectnegatively the key macroeconomic variables. Additionally, there isa weak feedback effect from a financial shock to fiscal sector andvice versa.
| Original language | English |
|---|---|
| Pages (from-to) | 343-367 |
| Number of pages | 25 |
| Journal | Journal of International Financial Markets, Institutions and Money |
| Volume | 32 |
| Early online date | 8 Jul 2014 |
| DOIs | |
| Publication status | Published - 1 Sept 2014 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 10 Reduced Inequalities
Keywords
- financial stress
- fiscal stress
- structural VAR
- G7 economies
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