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Author: Noriaki Kinoshita
Publisher: International Monetary Fund
ISBN:
Category : Debts, Public
Languages : en
Pages : 30
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Book Description
This paper examines the relationship between government debt and long-term interest rates. A dynamic general equilibrium model that incorporates debt nonneutrality is specified and solved, and numerical simulations using the model are undertaken. In addition, empirical evidence using panel data for 19 industrial countries is examined. The estimation provides some evidence supporting the theoretical predictions: the paper finds that the simulated and estimated interest rate effects of government debt tend to be small. However, an increase in government consumption and debt leads to a considerably larger effect. The paper also argues that, although the interest rate effects of pure crowding out may be limited, the economic impact of accumulating government debt cannot be ignored.
Author: Noriaki Kinoshita
Publisher: International Monetary Fund
ISBN:
Category : Debts, Public
Languages : en
Pages : 30
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Book Description
This paper examines the relationship between government debt and long-term interest rates. A dynamic general equilibrium model that incorporates debt nonneutrality is specified and solved, and numerical simulations using the model are undertaken. In addition, empirical evidence using panel data for 19 industrial countries is examined. The estimation provides some evidence supporting the theoretical predictions: the paper finds that the simulated and estimated interest rate effects of government debt tend to be small. However, an increase in government consumption and debt leads to a considerably larger effect. The paper also argues that, although the interest rate effects of pure crowding out may be limited, the economic impact of accumulating government debt cannot be ignored.
Author: United States. General Accounting Office
Publisher:
ISBN:
Category : Bonds
Languages : en
Pages : 48
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Book Description
Author: Mr.Manmohan S. Kumar
Publisher: International Monetary Fund
ISBN: 1455202185
Category : Business & Economics
Languages : en
Pages : 30
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Book Description
The recent sharp increase in fiscal deficits and government debt in many countries raises questions regarding their impact on long-term sovereign bond yields. While economic theory suggests that this impact is likely to be adverse, empirical results have been less clear cut, have generally ignored nonlinear effects of deficits and debt through some other key determinants of yields, and have been mostly confined to advanced economies. This paper reexamines the impact of fiscal deficits and public debt on long-term interest rates during 1980 - 2008, taking into account a wide range of country-specific factors, for a panel of 31 advanced and emerging market economies. It finds that higher deficits and public debt lead to a significant increase in long-term interest rates, with the precise magnitude dependent on initial fiscal, institutional and other structural conditions, as well as spillovers from global financial markets. Taking into account these factors suggests that large fiscal deficits and public debts are likely to put substantial upward pressures on sovereign bond yields in many advanced economies over the medium term.
Author: Iryna Kaminska
Publisher: International Monetary Fund
ISBN: 1484356829
Category : Business & Economics
Languages : en
Pages : 46
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Book Description
By constructing and estimating a structural arbitrage-free model of demand pressures on US real rates, we find that recent purchases of US government debt securities by the Fed and foreign officials have significantly affected the level and the dynamics of US real rates. In particular, by 2008, foreign purchases of US Treasuries are estimated to have had cumulatively reduced long term real yields by around 80 basis points. The subsequent total impact of Fed purchases in 2008-2012 has been even larger: the quantitative easing (QE) has depressed real 10-year yields by around 140 basis points. Our findings also reveal that the Fed policy interventions and foreign official purchases affect longer term real bonds mostly through a reduction in the bond premium.
Author: United States. Congress. House. Committee on Ways and Means
Publisher:
ISBN:
Category : Bonds
Languages : en
Pages : 336
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Book Description
Considers administration proposals to increase public debt ceiling and to eliminate interest rate ceiling on savings and Treasury bonds.
Author: Mark Gertler
Publisher: Mit Press
ISBN: 9780262072632
Category : Business & Economics
Languages : en
Pages : 489
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Book Description
The NBER Macroeconomics Annual presents pioneering work in macroeconomics by leading academic researchers addressed to a broad audience of public policymakers as well as to the academic community. Each paper is followed by comments and discussion to give a more complete context for the views expressed. The 2004 edition features a range of papers aimed at providing coherent and informative answers to such important questions as the effect of federal government debt on interest rates; the stochastic dimension of the American economy; the role of technology as a source of economic fluctuations; and the interaction of capital flows, fiscal policy, and monetary policies in developing countries, emerging markets, and OECD countries.
Author: Noriaki Kinoshita
Publisher:
ISBN:
Category : Electronic books
Languages : en
Pages :
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Book Description
Author: Mr.Salvatore Dell'Erba
Publisher: International Monetary Fund
ISBN: 1616355700
Category : Business & Economics
Languages : en
Pages : 44
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Book Description
This paper reconsiders the effects of fiscal policy on long-term interest rates employing a Factor Augmented Panel (FAP) to control for the presence of common unobservable factors. We construct a real-time dataset of macroeconomic and fiscal variables for a panel of OECD countries for the period 1989-2012. We find that two global factors—the global monetary and fiscal policy stances—explain more than 60 percent of the variance in the long-term interest rates. Compared to the estimates from models which do not account for global factors, we find that the importance of domestic variables in explaining long-term interest rates is weakened. Moreover, the propagation of global fiscal shocks is larger in economies characterized by macroeconomic and institutional weaknesses.
Author: Ms.Carmen Reinhart
Publisher: International Monetary Fund
ISBN: 1498338380
Category : Business & Economics
Languages : en
Pages : 47
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Book Description
High public debt often produces the drama of default and restructuring. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for government debt, limiting tax-base erosion. Financial repression is most successful in liquidating debt when accompanied by inflation. For the advanced economies, real interest rates were negative 1⁄2 of the time during 1945–1980. Average annual interest expense savings for a 12—country sample range from about 1 to 5 percent of GDP for the full 1945–1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt in advanced economies.
Author: John E. Petersen
Publisher:
ISBN:
Category : Debts, Public
Languages : en
Pages : 76
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Book Description
