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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/38914
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| Title: | | The economic consequences of rising US government debt: privileges at risk  |
| 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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