The Budgetary Implications of Higher Federal Reserve Board Interest Rates

Dean Baker

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: This paper explores the potential impact of the Federal Reserve Board’s decision on interest rates on the budget deficit. The first part recounts the history of the 1990s surplus, correcting the widely held misunderstanding that this surplus was achieved by the Clinton administration’s tax increases and spending cuts. The second part examines the direct and indirect impact of Fed rate hikes on the federal budget deficit. The third part examines the impact of Fed rate hikes on state budgets.

Keywords: jobs; employment; interest rates; unemployment; economic policy; Fed (search for similar items in EconPapers)
JEL-codes: E E4 E5 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2015-03
New Economics Papers: this item is included in nep-mac, nep-mon and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2015-07

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