search query: @indexterm Fiscal policy / total: 505
reference: 13 / 505
| Author: | Laubach, T. |
| Title: | New evidence on the interest rate effects of budget deficits and debt |
| Journal: | Journal of the European Economic Association
2009 : JUN, VOL. 7:4, p. 858-885 |
| Index terms: | debt fiscal policy monetary policy interest rates |
| Language: | eng |
| Abstract: | Estimating the effects of government debt and deficits on Treasury yields is difficult because the effects of fiscal policy need to be isolated from other influences. This article studies the relationship between long-horizon forward rates and future federal government deficits and debt as projected by the Congressional Budget Office to control for the effects of the business cycle and associated monetary policy actions, debt, deficits and interest rates. The estimated effects of government deficits and debt on interest rates are statistically significant and economically relevant for the entire 30-year sample for which these projections are available. Under plausible assumptions the parameter estimates are shown to be consistent with the predictions from the neoclassical growth model. |
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