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Title:The economic consequences of rising US government debt: privileges at risk PDF Logo
Authors:Bohn, Henning
Issue Date:2010
Series/Report no.:CESifo working paper Fiscal Policy, Macroeconomics and Growth 3079
Abstract:The rapidly growing federal government debt has become a concern for policy makers and the public. Yet the U.S. government has seemingly unbounded access to credit at low interest rates. Historically, Treasury yields have been below the growth rate of the economy. The paper examines the ramifications of debt financing at low interest rates. Given the short maturity of U.S. public debt - over $2.5 trillion maturing in 2010 - investor expectations are critical. Excessive debts justify reasonable doubts about solvency and monetary stability and thus undermine a financing strategy built on the perception that U.S. debt is safe.
JEL:H63
H62
E60
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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