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Financial globalization and the raising of public debt

Author

Listed:
  • Vincenzo Quadrini

    (University of Southern California)

  • Eva de Francisco

    (Towson University)

  • Marina Azzimonti

    (FRB of Philadelphia)

Abstract

During the last three decades the stock of government debt has increased in most developed countries. During the same period international capital markets have been liberalized. In this paper we develop a two-country political economy model with incomplete markets and endogenous government borrowing and show that countries choose higher levels of public debt when nancial markets are internationally integrated.

Suggested Citation

  • Vincenzo Quadrini & Eva de Francisco & Marina Azzimonti, 2011. "Financial globalization and the raising of public debt," 2011 Meeting Papers 575, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:575
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    References listed on IDEAS

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    1. Can DSGE models describe political cohesion?
      by Jason Rave in Macro Matters on 2012-05-29 02:41:00

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    Cited by:

    1. Martin, Fernando M., 2015. "Debt, inflation and central bank independence," European Economic Review, Elsevier, vol. 79(C), pages 129-150.

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