This Note endeavors to illustrate the relevance of the impact of the budget deficit upon the interest rate to the issue of crowding out. It is argued that empirical studies of the impact of deficits upon interest rates may be very useful in det­ermining whether (and how) crowding out occurs,...

This study empirically investigates the impacts of central government budget deficits and economic freedom on per capita real economic growth in OECD nations over the period 2003–2008. Economic growth is measured by the percentage growth rate of purchasing-power-parity adjusted real per capita...

This brief Note provides strong empirical evidence that federal govern­ment deficits can indeed have a positive and significant impact upon short­ term interest rates; the findings in this paper thereby establish another mechanism for the transmission of crowding out. This study differs from...

The present paper examines the impact that budget deficits exercise on economic growth in the United States. Using a simple growth model that includes a variety of public policy variables, we provide Instrumental Variables (IV) estimates that indicate growth in the United States over time. The...

This study investigates whether federal government budget deficits in the U.S. over the 1990-99 time period acted to crowd out private investment in new plant and equipment. Using quarterly data, empirical estimations clearly indicate that private investment was in fact negatively impacted by...

Using a half century of data, this empirical study adopts a simple loanable funds to investigate the impact of the budget deficits on the ex post real interest rate yield on high grade municipal bonds in the U.S. Autoregressive 2SLS estimates for the 1960-2012 study period find that the ex post...

This study adopts a loanable funds model to investigate the impact of budget deficits in the U.S. on long term real interest rates. The study investigates both ex post real 10 year Treasury note yields and ex post real 20 year Treasury bond yields. The study period runs from 1955 through 1987,...

This study provides current empirical evidence on the impact of net U.S. government borrowing (budget deficits) on the nominal interest rate yield on ten-year Treasury notes. The model includes an ex ante real short-term real interest rate yield, an ex ante real long-term interest rate yield,...

Evans has argued that the federal budget deficit in the United States does not influence the real rate of interest. Indeed, Evans (1985, p. 85) goes so far as to claim that “in over a century of U.S. history, large deficits have never been associated with high interest rate”. By contrast,...

This study investigates whether there is empirical evidence that federal budget deficits in the U.S. actually lead to the crowding out of private investment in new plant and equipment. Several specifications are undertaken. Each of these estimations finds that private investment is apparently...