Trade Openness and the Productivity Effects of Fiscal Policy Volatility
In recent years,the global trade situation has been complex and ever-changing,and changes in the trade environment will have a significant impact on the characteristics and effects of fiscal policies.The paper employs both a fixed effect panel data model and a partial linear function coefficient panel data model to investigate the impact of trade openness on the productivity effects of fiscal policy volatility and its underlying mechanisms,utilizing panel data spanning from 2001 to 2019 across 48 countries.The research reveals that fiscal policy volatility exerts a negative influence on total factor productivity,with the magnitude of this effect contingent upon the level of trade openness.Moreover,as trade openness increases,the magnitude of this effect diminishes progressively,eventually becoming statistically insignificant at a certain threshold of trade openness.Mechanism analysis suggests that as the level of trade openness increases,the impact of fiscal policy volatility on the expansion of government debt gradually decreases.Ultimately,trade openness can weaken the significant effect of fiscal policy volatility on the expansion of government debt,thereby reducing the negative impact of the productivity effect of fiscal policy volatility on total factor productivity.
Fiscal Policy VolatilityTotal Factor ProductivityTrade OpennessPartially Linear Functional-Coefficient Panel Data ModelGovernment Debt
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