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Interest rates and budget deficits: Cross-country evidence from the period 1924-1938

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  • Virén, Matti

Abstract

This paper examines the question of whether budget deficits raise nominal interest rates. The empirical analyses make use of cross-country data from 16 countries covering the period 1924 - 1938 .. Contrary to some recent studies (by e.g. Evans), it turns out that budget deficits affect nominal rates positively and thus the Ricardian equivalence proposition can be questioned.

Suggested Citation

  • Virén, Matti, 1988. "Interest rates and budget deficits: Cross-country evidence from the period 1924-1938," Bank of Finland Research Discussion Papers 13/1988, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp1988_013
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    File URL: https://www.econstor.eu/bitstream/10419/211516/1/bof-rdp1988-013.pdf
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    References listed on IDEAS

    as
    1. Starck, Christian C., 1988. "How are the key Finnish market interest rates determined?," Research Discussion Papers 11/1988, Bank of Finland.
    2. Åkerholm, Johnny, 1988. "External adjustment in small open economies : Some recent experience," Research Discussion Papers 6/1988, Bank of Finland.
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