Economics at your fingertips  

Government Debt-Interest Rate Nexus in G7 Countries over a Long Horizon

Lena Malešević-Perović ()
Additional contact information
Lena Malešević-Perović: Faculty of Economics, University of Split, Croatia

Authors registered in the RePEc Author Service: Lena Malesevic Perovic ()

Panoeconomicus, 2016, vol. 63, issue 5, 603-625

Abstract: The goal of this paper is to investigate the influence of government fiscal positions on long-term interest rates in G7 countries during the period 1948-2012. Our results suggest that a one percentage point increase in the stock of government debt in GDP is associated with an increase in government bond yields of 2.27-6.28 basis points, while an increase in government deficit in GDP of one percentage point is associated with an increase in government bond yields of 3.15-14.3 basis points. In addition, our results indicate that under reasonable assumptions and in the presence of widening output gaps, the neoclassical growth model predicts a rather low degree of crowding-out (around 36 percent), while the narrowing of the output gap leads to a complete crowding-out.

Keywords: Government debt; Interest rate; G7; Crowding-out (search for similar items in EconPapers)
JEL-codes: C23 E43 E62 H62 H63 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Panoeconomicus is currently edited by Kosta Josifidis

More articles in Panoeconomicus from Savez ekonomista Vojvodine, Novi Sad, Serbia
Bibliographic data for series maintained by Ivana Horvat ( this e-mail address is bad, please contact ).

Page updated 2021-04-23
Handle: RePEc:voj:journl:v:63:y:2016:i:5:p:603-625