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Fiscal policy --- Budget deficits --- Forecasting.

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Budget deficits --- Economic forecasting --- Government spending policy --- United States --- Economic conditions --- Forecasting.

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Budget deficits --- Economic forecasting --- Government spending policy --- United States --- Economic conditions --- Forecasting. --- Business & economics --- Political science

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We show that cross-country differences in the underlying volatility and persistence of macroeconomic shocks help explain two historical regularities in sovereign borrowing: the existence of "vicious" circles of borrowing-and-default ("default traps"), as well as the fact that recalcitrant sovereigns typically face higher interest spreads on future loans rather than outright market exclusion. We do so in a simple model where output persistence is coupled with asymmetric information between borrowers and lenders about the borrower's output process, implying that a decision to default reveals valuable information to lenders about the borrower's future output path. Using a broad cross-country database spanning over a century, we provide econometric evidence corroborating the model's main predictions-namely, that countries with higher output persistence and conditional volatility of transient shocks face higher spreads and thus fall into default traps more easily, whereas higher volatility of permanent output tends to dampen these effects.

Exports and Imports --- Investments: Bonds --- Macroeconomics --- Production and Operations Management --- General Financial Markets: General (includes Measurement and Data) --- Price Level --- Inflation --- Deflation --- International Lending and Debt Problems --- Macroeconomics: Production --- Investment & securities --- International economics --- Asset prices --- Debt default --- Bonds --- Output gap --- Sovereign bonds --- Prices --- Debts, External --- Production --- Economic theory --- United States --- Fiscal policy --- Budget deficits --- Finance, Public --- Econometric models.

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This paper discusses two ways of evaluating the quasi-fiscal deficit (QFD) and the link between them. It also suggests how to properly account for the QFD when calculating the overall deficit of the public sector. Finally, using an example of the energy market, it shows how to untangle a web of mutual nonpayments and properly evaluate the QFD generated in a sector characterized by the presence of both private and public agents.

Debts, Public --- Municipal services --- Budget deficits --- Government business enterprises --- Corporations, Government --- Authorities, Public (Government corporations) --- Federal corporations --- Government-owned corporations --- Public authorities (Government corporations) --- Public corporations (Government corporations) --- Corporations --- Nationalized companies --- Parastatals --- Public enterprises --- State-owned enterprises --- Business enterprises --- Deficits, Budget --- Budget --- Deficit financing --- Municipal services within corporate limits --- Public services --- Municipal government --- Public utilities --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Econometric models. --- Costs. --- Finance. --- Budgeting --- Exports and Imports --- Macroeconomics --- Public Finance --- Personal Income and Other Nonbusiness Taxes and Subsidies --- National Deficit Surplus --- Debt Management --- Sovereign Debt --- National Budget --- Budget Systems --- International Lending and Debt Problems --- Public Enterprises --- Public-Private Enterprises --- Nonprofit Organizations and Public Enterprise: General --- Public finance & taxation --- Budgeting & financial management --- International economics --- Civil service & public sector --- Public ownership --- nationalization --- Government debt management --- Budget planning and preparation --- Arrears --- Public sector --- Public financial management (PFM) --- External debt --- Economic sectors --- Debts, External --- Finance, Public --- Ghana --- Nationalization