The Impact of Fiscal Governance on Bond Markets: Evidence from Late Budgets and State Government Borrowing Costs
Publikation: Working paper › Forskning
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The Impact of Fiscal Governance on Bond Markets : Evidence from Late Budgets and State Government Borrowing Costs. / Andersen, Asger Lau; Lassen, David Dreyer; Nielsen, Lasse Holbøll Westh.
Department of Economics, University of Copenhagen, 2010.Publikation: Working paper › Forskning
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TY - UNPB
T1 - The Impact of Fiscal Governance on Bond Markets
T2 - Evidence from Late Budgets and State Government Borrowing Costs
AU - Andersen, Asger Lau
AU - Lassen, David Dreyer
AU - Nielsen, Lasse Holbøll Westh
N1 - JEL classification: H72, H61, H63
PY - 2010
Y1 - 2010
N2 - Does fiscal governance affect government borrowing costs? We operationalize fiscal governance as the ability of governments to pass a budget on time and, using a unique data set on budget enactment dates, analyze the effect of such late budgets on government bond yield spreads. Based on a sample of 36 US states in the period 1988-1997, we estimate that a budget delay of 30 days has a long run impact on the yield spread between 2 and 10 basis points. States with sufficient liquidity in the form of large reserves face small or no costs from late budgets.
AB - Does fiscal governance affect government borrowing costs? We operationalize fiscal governance as the ability of governments to pass a budget on time and, using a unique data set on budget enactment dates, analyze the effect of such late budgets on government bond yield spreads. Based on a sample of 36 US states in the period 1988-1997, we estimate that a budget delay of 30 days has a long run impact on the yield spread between 2 and 10 basis points. States with sufficient liquidity in the form of large reserves face small or no costs from late budgets.
KW - Faculty of Social Sciences
KW - political deadlock
KW - late budgets
KW - fiscal stalemate
KW - Chubb relative value survey
KW - debt cost
KW - bond spread
M3 - Working paper
BT - The Impact of Fiscal Governance on Bond Markets
PB - Department of Economics, University of Copenhagen
ER -
ID: 22432739