Using two alternative measures of expected inflation, this study investigates the impact of federal budget deficits on nominal long-term interest rate yields for the 1973.2-1995.4 period. Based on an open­ economy loanable funds framework, four instrumental variable esti­mates in first...

This study investigates the impact of federal budget deficits on both short-term and long­-term interest rates from 1971 to 1984 within an open IS-IM model that includes net international capital inflows. Two time periods are examined using quarterly data: 1971.4 to 1984.4 and 1979.4 to 1984.4....

This empirical note investigates the impact of the federal budget deficit upon the nominal long term rate of interest. The analysis differs from the existing literature on a number of counts. To begin with, the analysis uses the most updated evidence available on the structural deficit, as well...