The structure of this report is as follows: The report begins with this introductory chapter outlining the scope of the report and the wider market context. This report will examine the potential for sustainable bond issuance in five countries focusing on three key sectors. Over-indebtedness can adversely affect economic development through many channels-"debt overhang,” “fiscal space,” “crowding out” and increased crisis risk -making countries vulnerable to abrupt changes in market sentiment, jeopardizing both stability and growth. Bigger debt servicing burdens will reduce available fiscal space for development and stabilization and growing sovereign debt financing needs can crowd out domestic investment. But debt-induced uncertainty can now dampen investment and growth, especially given rising global interest rates. The fiscal support programs financed by public debt provided relief and saved lives and livelihoods. Sustaining development while maintaining debt sustainability has been made harder by the protracted effects of the pandemic on public finances, earnings and employment, and human capital accumulation of vulnerable populations. The coronavirus crisis has stiffened debt and development-related headwinds that had become strong even before 2020. This paper can provide a theoretical reference for reducing the negative impact of government policy adjustments and improving fiscal sustainability. Ultimately, this leads to a decrease in the fiscal sustainability of local governments. A reduction in the social financing scale can reduce government revenue and increase the debt scale. Therefore, economic policy uncertainty can lead to a reduction in the social financing scale. To cope with the impact of uncertain economic policies, corporations reduce the scale of investment and financing, and residents have defensive savings motivations, reducing consumption and increasing savings. Economic policy uncertainty has an impact on fiscal sustainability mainly through the mediating variable of the social financing scale.
We find that economic policy uncertainty shocks have a robust negative effect on fiscal sustainability after controlling for endogeneity.
To control for the impact of local government institutional and cultural factors on fiscal sustainability, we select data from 30 Chinese provinces for the 2012–2020 period for empirical analysis. The motivation for this paper is to investigate a previously unexplored exogenous shock to fiscal sustainability from economic policy uncertainty.
0 kommentar(er)
