Download or read book Budget Deficits and Interest Rates written by Ari Aisen and published by International Monetary Fund. This book was released on 2008-02 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: We extend the literature on budget deficits and interest rates in three ways: we examine both advanced and emerging economies and for the first time a large emerging market panel; explore interactions to explain some of the heterogeneity in the literature; and apply system GMM. There is overall a highly significant positive effect of budget deficits on interest rates, but the effect depends on interaction terms and is only significant under one of several conditions: deficits are high, mostly domestically financed, or interact with high domestic debt; financial openness is low; interest rates are liberalized; or financial depth is low.
Download or read book Deficits and Interest Rates written by and published by . This book was released on 1983 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Budget Deficits Push Up Interest Rates and Is This the Relevant Question written by and published by . This book was released on 2005 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: With mounting budget deficits, attention has focused on their economic effect, particularly whether budget deficits raise interest rates. Any explanation of the budget deficit-interest rate relationship must first come to grips with an indisputable fact: budget deficits consume real resources, and this -- rather than the behavior of interest rates -- is the more relevant public policy concern. When the government borrows from the public to finance public spending or tax cuts, the resources must come from somewhere. In mainstream theory, the resources come from the nation's pool of saving, which pushes up interest rates for simple supply and demand reasons. This "crowds out" private investment that was competing with government borrowing for the same pool of national saving. For this reason, economists often describe deficits as placing a burden on future generations. But other theories offer different explanations of where the resources come from that do not involve higher interest rates. In the capital mobility view, foreigners lend the United States the savings it needs to finance a deficit, leaving interest rates unaffected. But as foreign capital comes to the country, the dollar must appreciate. This causes U.S. exports and import-competing industries to become less competitive and the trade deficit to expand. In an alternative theory, popularly known as the Barro-Ricardo view, forward-looking, rational, infinitely-lived individuals see that a budget deficit would result in higher taxes or lower government spending in the future. Therefore, they reduce their consumption and save more today. This provides the government with the saving needed to finance its deficit, placing no upward pressure on interest rates. Empirical evidence that budget deficits do not affect interest rates does not prove that government budget deficits do not impose a burden, as demonstrated by the capital mobility and Barro-Ricardo views. In the capital mobility view, deficits crowd out the trade sector of the economy; in the Barro-Ricardo view, they crowd out current private consumption. And in both of these views, deficits no longer have any stimulative effect on the economy. Comparing changes in budget deficits to changes in interest rates is not a valid way to determine whether budget deficits affect interest rates. That is because there are many other factors that also affect interest rates. To determine the effect of budget deficits on interest rates, one must hold these other factors constant using statistical methods. Otherwise, the effect of budget deficits on interest rates could be misestimated or even reversed. Empirical evidence on a link between budget deficits and interest rates is mixed. There is not a consensus among economists on how to model the economy and what relevant variables should be included. Therefore, conclusions drawn from empirical evidence vary widely. More recent evidence tends to find a stronger, positive relationship between the two. In addition, 10 major forecasting models all predict that a budget deficit would increase interest rates. According to Gale and Orszag (2002), the models predict that a budget deficit equal to 1% of GDP would increase interest rates, with a range of 0.1-1 (mean=0.52) percentage points after one year and 0.05-2 (mean=0.99) percentage points after 10 years. This report will not be updated.
Download or read book The Impact of Deficits on Interest Rates Savings Investment and the Dollar written by United States. Congress. Joint Economic Committee and published by . This book was released on 1984 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Budget Deficit and Interest Rates written by José Nunes-Correia and published by . This book was released on 1993 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recoge: 1.Introduction - 2.Theoretical considerations - 3.Trends in long-term interest rates and budget deficits (1970-1990) - 4.The model - 5.Expected inflation and econometric issues - 6.Empirical evidence - 7.Conclusions.
Download or read book The Impact of Government Budget Deficits on Interest Rates written by Ali Abderrezak and published by . This book was released on 1987 with total page 221 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Interest Rates and Budget Deficits written by Kanhaya L. Gupta and published by Routledge. This book was released on 2005-10-11 with total page 275 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is widespread belief that the high interest rates of the 1980s and 1990s in the developed world have been caused by high budget deficits. Yet, there is no conclusive evidence to support such a belief. This book systematically examines this and other questions relating to the behaviour of real interest rates in eleven developed countries. The results show that generalizations across the countries can be hazardous and strongly suggests that factors specific to individual countries are still of vital importance.
Download or read book Anticipated Budget Deficits and the Term Structure of Interest Rates written by Daniel Valente Dantas and published by . This book was released on 1984 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the implications of government deficits in an overlapping generations consumption loan model with longterm assets. The only asset in the economy is a real consol issued by the government and serviced by lumpsum taxes on the young. We explore here the time path of short and longterm interest rates following the announcement of a future,transitory budget deficit under two alternative assumptions. In one case the deficit arises from transitory government spending, in the other case from a transfer.We show that a deficit policy ultimately raises longterm interest rates and lowers consol prices. The exact shape of the path of short-term rates depends on the source of the deficit and on the saving response to interestrates. In general, though, the term structure will be v-shaped. The interest of the model resides in the fact that the prices of longterm assets link the current generations to future disturbances. Because future disturbances affect future interest rates they affect the current value of debt outstanding and hence equilibrium short-term rates. The exact manner in which the disturbances are transmitted to prior periods depends on the extent to which consumers substitute easily across time or, on the contrary, have a strong preference for consumption smoothing.
Download or read book The Effect of Budget Deficits on Interest Rates written by Ilonka Lambeck and published by . This book was released on 1996 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Economic Consequences of Government Deficits written by L.H. Meyer and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 243 pages. Available in PDF, EPUB and Kindle. Book excerpt: On October 29 and 30, 1982, the Center for the Study of American Business and the Institute for Banking and Financial Markets at Washington "The Economic Consequences of University cosponsored a conference on Government Deficits. " This was the sixth annual Economic Policy Con ference sponsored by the Center, and the first it has cosponsored with the Institute. This book contains the papers and comments delivered at that conference. Recent and prospective large federal deficits have prompted a thorough reconsideration of the political sources and economic consequences of government deficits. The papers in Part I focus on the implications of deficits for monetary growth and inflation, and the papers in Part II consider the effect of deficits on interest rates and capital formation. The papers in Part III deal with the political sources and remedies for the explosive growth in government spending and increased reliance on deficits. The papers in Part I by Alan S. Blinder, Professor of Economics at Princeton University, and Preston J. Miller, Assistant Vice President and Research Advisor at the Federal Reserve Bank of Minneapolis, discuss the relation between monetary growth and deficits and present evidence on the of deficits on inflation and output. A deficit is said to be monetized effects vii viii THE ECONOMIC CONSEQUENCES OF GOVERNMENT DEFICITS when the Federal Reserve purchases bonds to aid the Treasury in financing the deficit.
Download or read book New Evidence on the Interest Rate Effects of Budget Deficits and Debt written by Thomas Laubach and published by . This book was released on 2003 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Federal Debt and Interest Costs written by Jared Brewster and published by . This book was released on 2010 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Federal Debt and Interest Costs written by Jared Brewster and published by DIANE Publishing. This book was released on 2011-05 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recently, the federal gov't. has been recording the largest budget deficits, as a share of gross domestic product (GDP), since the end of World War II. As a result of those deficits, the amount of federal debt held by the public has soared surpassing $9 trillion at the end of fiscal year 2010 and equal to 62 percent of GDP. The interest the government pays on that debt is currently low by historical standards as a percentage of GDP but is expected to grow rapidly over the next several years as interest rates rise. This study provides background material on federal debt and interest costs. Contents: Debt Held by the Public; Other Measures of Federal Debt; Interest Payments and Receipts. Charts and tables. This is a print on demand publication.
Download or read book Fiscal Policy and Interest Rates in the European Union written by Klaas Knot and published by Edward Elgar Publishing. This book was released on 1996-01-01 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an extensive study concerned with the potential effects of fiscal policy on financial markets in the EU. It takes into account the gradual liberalization of capital movements through Western Europe & the framework of the European Monetary System.
Download or read book Government Budget Deficits and Interest Rates written by and published by . This book was released on 1992 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Budget Deficits and Rates of Interest in the World Economy written by Jacob A. Frenkel and published by . This book was released on 1984 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Crowding out Controversy written by Bruno Rachild Sakak and published by . This book was released on 1984 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt:
