Deficits and Real Interest Rates: A Note Extending the Hoelscher Model Report as inadecuate




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Abstract

This study adopts a loanable funds model to investigate the impact of budget deficits in the U.S. on long term real interest rates. The study investigates both ex post real 10 year Treasury note yields and ex post real 20 year Treasury bond yields. The study period runs from 1955 through 1987, using quarterly data. Two stage least squares estimations reveal that budget deficits did indeed raise these ex post real long term interest rate yields.



Item Type: MPRA Paper -

Original Title: Deficits and Real Interest Rates: A Note Extending the Hoelscher Model-

English Title: Deficits and Real Interest Rates: A Note Extending the Hoelscher Model-

Language: English-

Keywords: budget deficits; ex post real long term interest rates; two stage least squares estimations-

Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; DeflationE - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E43 - Interest Rates: Determination, Term Structure, and EffectsG - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing ; Trading Volume ; Bond Interest RatesH - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit ; Surplus-





Author: Cebula, Richard

Source: https://mpra.ub.uni-muenchen.de/54608/







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