When People Refer to ‘Fiscal Space,’ What Does It Mean?

Investors may hear economists and market analysts using the term “fiscal space.” Those who are invested, or plan to invest, in countries with high debt levels should know what it means.

Fiscal space measures how much money a country can borrow at low yields without stressing markets or having trouble borrowing. More pointedly, it reflects how much room there is for the government to tap the markets in the event of an economic crisis.