Fiscal policy, trigger points and interest rates: Additional evidence from the U.S.

We empirically investigate whether the relationship between interest rates and public deficits/debt may be nonlinear for the U.S. Using threshold estimation, we find evidence of level-dependent effects on interest rates, implying a significant effect of projected deficits and debt in the U.S. only if the deficit surpasses approximately 5% of GDP.

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Year of publication:	2011
Authors:	Reitschuler, Gerhard ; Sendlhofer, Rupert
Publisher:	Innsbruck : University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon)
Subject:	Zins \| Haushaltsdefizit \| Nichtlineares Verfahren \| Schätzung \| USA \| Public debt \| public deficit \| long-term interest rates \| nonlinearity \| threshold models \| Domar model

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Series:	Working Papers in Economics and Statistics ; 2011-23
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	745131875 [GVK] hdl:10419/73539 [Handle] RePEc:inn:wpaper:2011-23 [RePEc]
Classification:	E43 - Determination of Interest Rates; Term Structure Interest Rates ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; H62 - Deficit; Surplus
Source:	EconStor

Persistent link: https://ebvufind01.dmz1.zbw.eu/10010294827