Interest rates and budget deficits : Cross-country evidence from the period 1924-1938
Virén, Matti (13.07.1988)
Numero
13/1988Julkaisija
Bank of Finland
1988
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201807301741Tiivistelmä
This paper examines the question of whether budget deficits raise nominal interest rates. The empirical analyses make use of cross-country data from 16 countries covering the period 1924 - 1938 .. Contrary to some recent studies (by e.g. Evans), it turns out that budget deficits affect nominal rates positively and thus the Ricardian equivalence proposition can be questioned.