A Theoretical Note on the Impact of Debt Service Responsiveness to Interest Rates on Macroeconomic Stability

This theoretical note examines the impact of the interest sensitivity of government outlays on macroeconomic stability and economic policy effectiveness. It is found that, if the interest sensitivity of government outlays exceeds the interest sensitivity of private sector spending, the condition for ISLM stability is reversed and a policy of increasing the money stock acts to reduce the level of GDP.

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Year of publication:	2000
Authors:	Cebula, Richard ; Renas, Stephen M.
Published in:	Economia Internazionale / International Economics. - Camera di Commercio di Genova. - Vol. 53.2000, 2, p. 135-140
Publisher:	Camera di Commercio di Genova

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Type of publication:	Article
Classification:	E12 - Keynes; Keynesian; Post-Keynesian
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008459605