Federal Government Budget Deficits and Real Long-Term Interest Rates in the United States: An Alternative Perspective

Richard Cebula () and Ira S. Saltz

Swiss Journal of Economics and Statistics (SJES), 1997, vol. 133, issue I, 19-27

Abstract: The empirical results obtained in this study suggest that, in the United States, a rise in the real long-term rate of interest elicits a rise in the federal government budget deficit. This impact of the real long-term interest rate appears to arise because of the negative effect that higher real interest rates exercise on the unemployment rate. The findings obtained in this study imply that a monetary policy that directly or indirectly raises real long-term interest rates may raise the government budget deficit as well.

Date: 1997
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