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Budget Deficits and Interest Rates A Fresh Perspective

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 hi...

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Bibliographic Details
Main Author: Aisen, Ari
Other Authors: Hauner, David
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2008
Series:IMF Working Papers
Subjects:
Budgeting
Budget
Government Debt Management
Price Level
Deflation
Budget Systems
Financial Services Industry
Public Finance
Finance: General
Domestic Debt
Budget Planning And Preparation
Budgeting & Financial Management
Debt Management
Sovereign Debt
Finance
Public Finance & Taxation
Debt
Debts, Public
General Financial Markets: General (includes Measurement And Data)
Prices
Inflation
Emerging And Frontier Financial Markets
National Budget
Macroeconomics
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary: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
Physical Description:19 pages
ISBN:9781451869040

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