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The Relationship between Federal Deficits and Real Interest Rates

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  • Tseng, K C

Abstract

Real interest rates fluctuated a great deal since the 1970s. In the 1980s federal deficits accelerated and their impact on both nominal and real interest rates gained lots of attention. Based on monthly and quarterly data from January 1971 to December 1997 it is found that federal deficits had significant positive effect on the real interest rates: personal income or consumption are found to have significant positive impact on the real interest rates, whereas expected inflation and money supply are found to have negative impact on the real interest rates. These findings are consistent with the conventional economic theory. Copyright 2000 by Kluwer Academic Publishers

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  • Tseng, K C, 2000. "The Relationship between Federal Deficits and Real Interest Rates," Review of Quantitative Finance and Accounting, Springer, vol. 14(1), pages 5-15, January.
    • Handle: RePEc:kap:rqfnac:v:14:y:2000:i:1:p:5-15
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    Cited by:

    1. Mohanty, Ranjan Kumar & Sahoo, Biresh K., 2017. "Examining the Eco-Macroeconomic Performance Index of India: A Data Envelopment Analysis Approach," Working Papers 17/202, National Institute of Public Finance and Policy.
    2. Ranjan Kumar Mohanty & N. R. Bhanumurthy, 2021. "Revisiting the role of fiscal policy in determining interest rate in India," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 26(2), pages 293-318, April.

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