Rome, 10 June (LaPresse) – ‘The prudent approach adopted in fiscal policy in recent years has strengthened our ability to cope with external turbulence and the recent pressures on global sovereign markets.’ So said UPB President Lilia Cavallari in her report on the Fiscal Policy Report, highlighting that “maintaining a credible path of public debt reduction is essential to prevent external shocks from translating into sudden deteriorations in creditworthiness and potentially triggering far-reaching crises”. Cavallari explained that “analyses by the Parliamentary Budget Office show that yields on Italian government bonds react significantly to surprises in the macroeconomic outlook and public spending, with particular sensitivity to negative surprises. A larger-than-expected expansion in public consumption causes government bond yields to rise by around 30 basis points on average across short- and long-term maturities two years later".
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