01719cas a2200253 a 4500 AALejournalIMF007616 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451850864 1018-5941 BD-DhAAL BD-DhAAL Prati, Alessandro. Signaling Fiscal Regime Sustainability / Alessandro Prati, Francesco Drudi. Washington, D.C. : International Monetary Fund, 1999. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper proposes a signaling model that offers a new perspective on why governments deviate from optimal tax smoothing and delay debt stabilization. In our model, dependable-but not fully credible-governments have an incentive to tighten the fiscal regime when the signaling effect on credit ratings is larger (that is, when a sufficiently large stock of debt has been accumulated). At this point, they may deviate from tax smoothing not to be mimicked by weak governments. The model predicts that primary balances and debt stocks are complementary inputs in the credit rating function as tests on Italian, Irish, Belgian, and Danish data show. Mode of access: Internet Drudi, Francesco. IMF Working Papers; Working Paper ; No. 1999/086 Full text available on IMF http://elibrary.imf.org/view/journals/001/1999/086/001.1999.issue-086-en.xml IMF e-Library