Fiscal-Financial Vulnerabilities

29 Pages Posted: 9 Aug 2019

Date Written: 2019


The paper analyses the linkages from financial developments to public finances. It maps and discusses the transmission channels to fiscal variables. These channels include asset prices, financing conditions, balance sheets of banks, non-banks and central banks and international linkages. The study argues that the fiscal effects via each and all these channels can be very serious in magnitude and can put the sustainability of public finances at risk. However, there is only limited in-depth analysis of these channels and risks.

Keywords: public debt, deficits, financial stability, fiscal financial linkages, sustainability, asset prices

JEL Classification: E620, G010, H630

Suggested Citation

Schuknecht, Ludger, Fiscal-Financial Vulnerabilities (2019). CESifo Working Paper No. 7776, Available at SSRN:

Ludger Schuknecht (Contact Author)

Bundesministerium der Finanzen ( email )

Wilhelmstr├če 97
Berlin, D-10117

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