Many economic time series exhibit dramatic breaks associated with events such as
economic recessions, financial panics, and currency crises. Such changes in regime may …

This paper examines the macroeconomic implications of sovereign risk in a model in which
banks hold domestic government debt. News of a future sovereign default hampers financial …

This article analyses the impact of strained government finances on macroeconomic stability
and the transmission of fiscal policy. Using a variant of the model by Cúrdia and Woodford …

We study slow moving debt crises: self-fulfilling equilibria in which high interest rates, due to
the fear of a future default, lead to a gradual but faster accumulation of debt, ultimately …

This article explores the macroeconomic consequences of fiscal consolidations whose
timing and composition–either tax–or spending–based–are uncertain. We find that the …

This paper estimates the impact on the US economy of four types of uncertainty about (i)
government spending,(ii) tax changes,(iii) public debt, and (iv) monetary policy. Uncertainty …

Monetary policy decisions tend to be based on systematic analysis of alternative policy
choices and their associated macroeconomic impacts: this is science. Fiscal policy choices …

We investigate empirically how fiscal shocks—unanticipated and exogenous changes of
government consumption growth—affect the sovereign default premium. For this purpose …

We study fiscal rules using a sovereign default model. A debt-brake (spread-brake) rule
imposes a ceiling on the fiscal deficit when the sovereign debt (spread) is above a threshold …

Sovereign risk premia in several euro area countries have risen markedly since 2008,
driving up credit spreads in the private sector as well. We propose a New Keynesian model …