Does it matter who finances the government's debt?

Jonathan Davis and Lillian Derr

Dallas Fed Economics from Federal Reserve Bank of Dallas

Abstract: Government debt financed from domestic savings has a smaller effect on interest rates than government debt financed from foreign borrowing, and nations that are net international creditors can borrow more cheaply than net international debtors. These observations help explain massive government borrowing since 2008 while bond yields remained persistently low.

Keywords: government debt; foreign borrowing; domestic savings; interest rates (search for similar items in EconPapers)
Date: 2026-08-11
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