Journal of Applied Finance & Banking

Debt and other determinants of fiscal policy use

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• Abstract

  Using a measure of variation in real government expenditure for the period 1998 through 2008, this paper employs cross country regression analysis to look at the effect of public debt, both singularly and when adjusting for control variables, on fiscal policy usage. The empirical findings are consistent with the hypothesis that higher public debt tends to lessen the use of fiscal policy.