An Empirical Note on the Impact of the Federal Budget Deficit on Ex Ante Real Long-Term, Interest Rates, 1973-1995

Richard Cebula ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study investigates the impact of the U.S. federal budget deficit on ex ante real long-term interest rates in the U.S. using quarterly data for the period from 1973 through 1995. The study adopts a loanable funds model. Two stage least squares estimates reveal that the federal budget deficit acted to elevate the ex ante real long term interest rate on ten year U.S. Treasury notes, Moody's Aaa-rated corporate bonds, and Moody's Baa-rated corporate bonds.

Keywords: budget deficits; ex ante real long term interest rates; loanable funds model (search for similar items in EconPapers)
JEL-codes: E31 E43 H62 (search for similar items in EconPapers)
Date: 1996-01-30
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Citations: View citations in EconPapers (21)

Published in Southern Economic Journal 4.63(1997): pp. 1094-1099

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:51414

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