Open Economies Review

, Volume 23, Issue 5, pp 805–822 | Cite as

Financial Integration and Fiscal Policy

  • Davide FurceriEmail author
  • Aleksandra Zdzienicka
Research Article


The aim of this paper is to assess the impact of financial integration on fiscal policy. Using an unbalanced panel of 31 OECD countries from 1970 to 2009, the paper shows that financial integration has significant disciplinary effects by reducing fiscal deficits and (discretionary) spending volatility. In addition, we find that financial integration affects the composition of government debt and enhances risk-sharing by increasing the share of foreign debt to the total. The results are robust to both de jure and de facto measures of financial integration, different measures of budget balance, and different estimation strategies.


Financial integration Fiscal policy Spending volatility Foreign debt 


F3 F4 E62 


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.International Monetary FundWashingtonUSA
  2. 2.University of PalermoPalermoItaly

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