Debt and Deficits: Fiscal Analysis with Stationary Ratios
4 Feb 2025
12:45 -14:00
Times are shown in local time.
Open to: All
Sinyi Seminar Room, Cambridge Judge Business School
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Finance seminar
Speaker: Dr Can Gao, Swiss Finance Institute and University of St Gallen
About the seminar topic
We introduce a new measure of a government’s fiscal position that exploits cointegrating relationships among fiscal variables. The measure is a loglinear combination of tax revenue, government spending and the market value of government debt that – unlike the debt-GDP ratio – appears stationary in the US and 15 other developed countries.
A weak fiscal position must ultimately be resolved by low future returns on government debt or by fiscal adjustment, a combination of high tax growth and low spending growth. Empirically, we find that debt returns play a negligible role and fiscal adjustment predominantly consists of changes in spending growth.
Please note, a light lunch will be served from 12:00 in S2.03, Simon Sainsbury Centre, Cambridge Judge Business School.
Speaker bio
Can Gao is an Assistant Professor at Swiss Finance Institute and University of St Gallen. He holds a PhD in Finance from Imperial College London and a PhD in Mathematics from EPFL. His research focuses on asset pricing, international finance and macro-finance. Currently, he is a visiting fellow at CEMFI and Collegio Carlo Alberto, and a technical advisor for BIS.
Register
No registration required. If you have any questions about this seminar, please email Khanti Tsui.