The interplay of interest rates and debt-financed government spending
Author
Faculty Advisor
Date
2023
Keywords
government debt, program spending, interest rates
Abstract (summary)
Proponents focus on the average fiscal cost of program spending when the interest rate on government debt is less than the economy’s growth rate. They ignore the potentially large marginal fiscal cost of deficit-financed increases in spending that arise when a higher public debt increases interest rates on government debt and lowers growth rates.
Publication Information
Bev Dahlby and Ergete Ferede: “The Interplay of Interest Rates and Debt-Financed Government Spending,” EconPol Policy Brief 47 January 2023. https://www.econpol.eu/publications/policy_brief_47
DOI
Notes
Item Type
Article
Language
Rights
All Rights Reserved