IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v28y2000i3p187-194.html
   My bibliography  Save this article

Do Structural Federal Budget Deficits Impact Commercial Bank Interest Rates? A Comment

Author

Listed:
  • Ali F. Darrat

    (Louisiana Tech University)

Abstract

This article finds no compelling evidence to support Cebula's recent claim that higher structural budget deficits in the United States have raised commercial bank interest rates. It appears that Cebula's results are spurious and likely the outcome of the use of nonstationary data. Correcting for this problem, the results deny the presence of any significant crowding out in the data. This inference stands up to several sensitivity tests and accords well with the body of evidence against the crowding out phenomenon in the U.S. economy.

Suggested Citation

  • Ali F. Darrat, 2000. "Do Structural Federal Budget Deficits Impact Commercial Bank Interest Rates? A Comment," Public Finance Review, , vol. 28(3), pages 187-194, May.
    • Handle: RePEc:sae:pubfin:v:28:y:2000:i:3:p:187-194
    DOI: 10.1177/109114210002800301
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114210002800301
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114210002800301?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Stock, James H. & Watson, Mark W., 1989. "Interpreting the evidence on money-income causality," Journal of Econometrics, Elsevier, vol. 40(1), pages 161-181, January.
    2. Plosser, Charles I., 1987. "Fiscal policy and the term structure," Journal of Monetary Economics, Elsevier, vol. 20(2), pages 343-367, September.
    3. Evans, Paul, 1987. "Interest Rates and Expected Future Budget Deficits in the United States," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 34-58, February.
    4. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    5. Shiller, Robert J, 1981. "Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?," American Economic Review, American Economic Association, vol. 71(3), pages 421-436, June.
    6. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    8. Kleidon, Allan W, 1986. "Variance Bounds Tests and Stock Price Valuation Models," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 953-1001, October.
    9. Pantula, Sastry G & Gonzalez-Farias, Graciela & Fuller, Wayne A, 1994. "A Comparison of Unit-Root Test Criteria," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 449-459, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard J. Cebula, 2002. "A contemporary investigation of causality between the primary government budget deficit and the ex ante real long term interest rate in the US," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(223), pages 417-435.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ali Darrat & Fatima Al-Shamsi, 2005. "On the path of integration in the Gulf region," Applied Economics, Taylor & Francis Journals, vol. 37(9), pages 1055-1062.
    2. John D. Levendis, 2018. "Time Series Econometrics," Springer Texts in Business and Economics, Springer, number 978-3-319-98282-3, August.
    3. Yousif. Al-Yousif, 1999. "On the Role Exports in the Economic Growth of Malaysia: A Multivariate Analysis," International Economic Journal, Taylor & Francis Journals, vol. 13(3), pages 67-75.
    4. Chor Foon Tang, 2011. "An exploration of dynamic relationship between tourist arrivals, inflation, unemployment and crime rates in Malaysia," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 38(1), pages 50-69, January.
    5. Tang, Chor Foon, 2008. "A re-examination of the role of foreign direct investment and exports in Malaysia's economic growth," MPRA Paper 38536, University Library of Munich, Germany.
    6. John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know about Unit Roots," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 141-220, National Bureau of Economic Research, Inc.
    7. A. F. Darrat & D. A. Yousef, 2004. "Fertility, human capital, and macroeconomic performance: long-term interactions and short-run dynamics," Applied Financial Economics, Taylor & Francis Journals, vol. 14(8), pages 537-554.
    8. W A Razzak, 2007. "A Perspective on Unit Root and Cointegration in Applied Macroeconomics," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 4(1), pages 77-102.
    9. Yousif Khalifa Al-Yousif, 2002. "Defense Spending and Economic Growth: Some Empirical Evidence from the Arab Gulf Region," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(3), pages 187-197.
    10. A. F. Darrat & M. K. Hsu & M. Zhong, 2000. "Testing export exogeneity in Taiwan: further evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 7(9), pages 563-567.
    11. Ali Darrat & Khaled Elkhal & Gaurango Banerjee & Maosen Zhong, 2004. "Why do US banks borrow from the Fed? A fresh look at the 'reluctance' phenomenon," Applied Financial Economics, Taylor & Francis Journals, vol. 14(7), pages 477-484.
    12. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    13. Pär Österholm, 2005. "The Taylor Rule: A Spurious Regression?," Bulletin of Economic Research, Wiley Blackwell, vol. 57(3), pages 217-247, July.
    14. Levent KORAP, 2008. "Exchange Rate Determination Of Tl/Us$:A Co-Integration Approach," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 7(1), pages 24-50, May.
    15. David F. Hendry & Grayham E. Mizon, 2016. "Improving the teaching of econometrics," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1170096-117, December.
    16. Geweke, J. & Joel Horowitz & Pesaran, M.H., 2006. "Econometrics: A Bird’s Eye View," Cambridge Working Papers in Economics 0655, Faculty of Economics, University of Cambridge.
    17. Antràs Pol, 2004. "Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-36, April.
    18. Usman Qamar Sheikh & Muhammad Zafar Iqbal & Hafiz Khalil Ahmad, 2016. "The Impact of Foreign Aid, Energy Production and Human Capital on Income Inequality: A Case Study of Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 5(1), pages 1-9, March.
    19. Yuan, Chunming, 2011. "The exchange rate and macroeconomic determinants: Time-varying transitional dynamics," The North American Journal of Economics and Finance, Elsevier, vol. 22(2), pages 197-220, August.
    20. Chung, Heetaik & Lee, Bong-Soo, 1998. "Fundamental and nonfundamental components in stock prices of Pacific-Rim countries," Pacific-Basin Finance Journal, Elsevier, vol. 6(3-4), pages 321-346, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:28:y:2000:i:3:p:187-194. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.