An Empirical Analysis of the Impact of Federal Budget Deficits on Long-term Nominal Interest Rate Yields, 1973.2-1995.4, Using Alternative Expected Inflation Measures

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 differences are provided. In all cases, the budget deficit is found to elevate the nominal long-term interest rate.

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Year of publication:	1997-01-15
Authors:	Cebula, Richard

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Type of publication:	Book / Working Paper
Language:	English
Notes:	Cebula, Richard (1997): An Empirical Analysis of the Impact of Federal Budget Deficits on Long-term Nominal Interest Rate Yields, 1973.2-1995.4, Using Alternative Expected Inflation Measures. Published in: Review of Financial Economics , Vol. 7, No. 1 (17 April 1998): pp. 55-64.
Classification:	E31 - Price Level; Inflation; Deflation ; E43 - Determination of Interest Rates; Term Structure Interest Rates ; E47 - Forecasting and Simulation ; H62 - Deficit; Surplus
Source:	BASE

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