6533b86dfe1ef96bd12ca9e4
RESEARCH PRODUCT
Fiscal consolidation and financial reforms
João Tovar JallesLuca AgnelloVitor CastroRicardo M. Sousasubject
macroeconomic determinantsEconomics and Econometricsrare events logit modelmedia_common.quotation_subjectfinancial reformsLogitSocial SciencesProbitRecessionfiscal consolidationConsolidation (business)0502 economics and businessOpenness to experienceEconomicsinstitutional quality050207 economicsmedia_commonFinance050208 financeeconomic factorsbusiness.industry05 social sciences1. No povertyCiências Sociais::Economia e GestãoFinancial conditionsmacroeconomic determinantfinancial reformAusterityFiscal consolidationrecessions8. Economic growth:Economia e Gestão [Ciências Sociais]businessFinancial sectordescription
We use data for a panel of 17 countries over the period 1980-2005 to investigate the impact of fiscal consolidation on the likelihood of financial reforms. We show that fiscal adjustments do not boost the implementation of financial reforms. However, tax-driven fiscal consolidation programs raise the likelihood of banking sector reforms. Moreover, we find that: (i) an increase in the degree of trade openness makes countries less likely to implement financial reforms; (ii) an increase in the interest rate spreads accelerates the path of financial reforms, especially, external capital account reforms; and (iii) an improvement in the quality of political institutions strongly enhances the probability of financial reforms.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2015-03-01 |