Interest rates and budget deficits: Cross-country evidence from the period 1924-1938

Matti Virén

No 13/1988, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This paper examines the question of whether budget deficits raise nominal interest rates. The empirical analyses make use of cross-country data from 16 countries covering the period 1924 - 1938 .. Contrary to some recent studies (by e.g. Evans), it turns out that budget deficits affect nominal rates positively and thus the Ricardian equivalence proposition can be questioned.

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp1988_013

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