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In Sickness and in Debt - Public Finances in the Time of Covid-19
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At the onset of the Covid-19 pandemic, countries and U.S. states that were more fiscally constrained saw increases in their borrowing costs, showed research from Professor Marti Subrahmanyam and co-authors Patrick Augustin (McGill), Valeri Sokolovski (HEC Montreal) and Davide Tomio (UVA Darden). Fiscally strong countries, on the other hand, were more resilient to growth shocks resulting from the pandemic.
The level of Covid-19 infections increased a government’s cost of borrowing, but only for those countries and states that were fiscally constrained. In other words, countries and states that had wiggle room in their budgets weren’t penalized with significantly higher borrowing costs in the market, regardless of how hard they were hit by the pandemic.
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The level of Covid-19 infections increased a government’s cost of borrowing, but only for those countries and states that were fiscally constrained. In other words, countries and states that had wiggle room in their budgets weren’t penalized with significantly higher borrowing costs in the market, regardless of how hard they were hit by the pandemic.
View more here: