| Author: | Minford, P. |
| Title: | Interest rates and bond financed deficits in a Ricardian two-party democracy |
| Journal: | Weltwirtschaftliches Archiv
1988 : VOL. 124:3, 387-402 |
| Index terms: | DEMOCRACY FISCAL POLICY INTEREST RATES |
| Language: | eng |
| Abstract: | The Ricardian equivalence theorem asserts that - under certain plausible conditions - bond financed government deficit does not raise real interest rates. The present article proves that in a two- party democracy setting, the "left" party does not necessarily expropriate the holders of money-denominated bonds through inflation. The thesis is empirically tested on post-World War II data of the US and the UK. |
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