Budget deficits matter more in emerging markets
The effects of budget deficits on interest rates are larger and more robust in emerging markets, a new IMF working paper finds.
The authors suggest that their finding have "important policy implications, particularly regarding the effectiveness of fiscal stabilisation."
"They suggest that fiscal policy is more effective when the initial budget deficit and level of debt are lower, and when financial openness and financial depth are greater, because the effect of deficits on interest rates is
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