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Interest Rate Risk and Other Determinants of Post-WWII U.S. Government Debt/GDP Dynamics

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  • George J. Hall
  • Thomas J. Sargent

Abstract

This paper uses the sequence of government budget constraints to motivate estimates of interest payments on the U.S. Federal government debt. We explain why our estimates differ conceptually and quantitatively from those reported by the U.S. government. We use our estimates to account for contributions to the evolution of the debt to GDP ratio made by inflation, growth, and nominal returns paid on debts of different maturities.

Suggested Citation

  • George J. Hall & Thomas J. Sargent, 2010. "Interest Rate Risk and Other Determinants of Post-WWII U.S. Government Debt/GDP Dynamics," NBER Working Papers 15702, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15702
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    References listed on IDEAS

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    1. Butkiewicz, James L., 1983. "The market value of outstanding government debt : Comment," Journal of Monetary Economics, Elsevier, vol. 11(3), pages 373-379.
    2. Cox, W. Michael, 1985. "The behavior of Treasury securities; monthly, 1942-1984," Working Papers 8501, Federal Reserve Bank of Dallas.
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    4. Gurkaynak, Refet S. & Sack, Brian & Wright, Jonathan H., 2007. "The U.S. Treasury yield curve: 1961 to the present," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2291-2304, November.
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    7. Seater, John J., 1981. "The market value of outstanding government debt, 1919-1975," Journal of Monetary Economics, Elsevier, vol. 8(1), pages 85-101.
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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