Fiscal policies and the integrated world stock market

Assaf Razin*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

The paper develops a two-country stochastic model of an integrated world stock market in order to address issues concerning the effects of tax and spending policies on savings, asset portfolios, and stock-market valuations. General conditions for government-finance neutrality under uncertainty are derived and the characteristics of the international transmission of uncertain future spending policies are spelled out. They are shown to depend precisely on a transfer-problem criterion involving the government and the private-sector propensities to spend in different states of nature and on the cross-country correlations between shocks to productivity and public spending.

Original languageEnglish
Pages (from-to)109-122
Number of pages14
JournalJournal of International Economics
Volume29
Issue number1-2
DOIs
StatePublished - Aug 1990

Funding

FundersFunder number
Foerder Institute for Economic Research
Tel Aviv University

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