Recent Evidence on the Impact of Federal Government Budget Deficits on the Nominal Long Term Mortgage Interest Rate in the U.S
This study provides recent empirical evidence on the impact of the federal budget deficit on the nominal long term mortgage interest rate yield in the U.S. The study is couched within a loanable funds model that includes the cost to financial institutions of borrowing funds, expected inflation, and the percentage growth rate of real GDP, as well as the federal budget deficit expressed as a percent of GDP. Using annual data for the period 1970-2008, two-stage least squares autoregressive estimation reveals that the federal budget deficit, expressed as a percent of GDP, exercised a positive and statistically significant impact on the long term mortgage interest rate yield.
|Date of creation:||09 Sep 2012|
|Date of revision:|
|Publication status:||Published in International Journal of Finance & Accounting Studies 1.1(2013): pp. 28-33|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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- Richard Cebula & Pablo Cuellar, 2010. "Recent evidence on the impact of government budget deficits on the ex ante real interest rate yield on Moody’s Baa-rated corporate bonds," Journal of Economics and Finance, Springer, vol. 34(3), pages 301-307, July.
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- Cebula, Richard J, 1988. "Federal Government Budget Deficits and Interest Rates: An Empirical Analysis for the United States, 1955-1984," Public Finance = Finances publiques, , vol. 43(3), pages 337-48.
- P. A. V. B. Swamy & Bharat R. Kolluri & Rao N. Singamesetti, 1988. "What do regressions of interest rates on deficits imply?," Finance and Economics Discussion Series 3, Board of Governors of the Federal Reserve System (U.S.).
- Cebula, Richard, 1996. "An Empirical Note on the Impact of the Federal Budget Deficit on Ex Ante Real Long-Term, Interest Rates, 1973-1995," MPRA Paper 51414, University Library of Munich, Germany.
- Vito Tanzi, 1985. "Fiscal Deficits and Interest Rates in the United States: An Empirical Analysis, 1960-84 (DÃ©ficits budgÃ©taires et taux d'intÃ©rÃªt aux Etats-Unis: analyse empirique, 1960-84) (El dÃ©ficit fiscal y la," IMF Staff Papers, Palgrave Macmillan, vol. 32(4), pages 551-576, December.
- Richard J. Cebula, 2005. "Recent empirical evidence on the impact of the primary budget deficit on nominal longer term treasury note interest rate yields," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 7(1), pages 47-58.
- Hoelscher, Gregory, 1986. "New Evidence on Deficits and Interest Rates," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(1), pages 1-17, February.
- Barth, James R & Iden, George & Russek, Frank S, 1986. "Government Debt, Government Spending, and Private Sector Behavior: Comment," American Economic Review, American Economic Association, vol. 76(5), pages 1158-67, December.
- Cebula, Richard J & Belton, Willie J, 1993. "Government Budget Deficits and Interest Rates in the United States: Evidence for Closed and Open Systems Put into Perspective, 1955-1989," Public Finance = Finances publiques, , vol. 48(2), pages 188-209.
- Cebula, Richard J. & Saltz, Ira S., 1998. "Ex Ante Real Long-Term Interest Rates and U.S. Federal Budget Deficits: Preliminary Error-Correction Evidence, 1971-1991," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 51(2), pages 163-169.
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