Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73539
Authors: 
Reitschuler, Gerhard
Sendlhofer, Rupert
Year of Publication: 
2011
Series/Report no.: 
Working Papers in Economics and Statistics 2011-23
Abstract: 
We empirically investigate whether the relationship between interest rates and public deficits/debt may be nonlinear for the U.S. Using threshold estimation, we find evidence of level-dependent effects on interest rates, implying a significant effect of projected deficits and debt in the U.S. only if the deficit surpasses approximately 5% of GDP.
Subjects: 
Public debt
public deficit
long-term interest rates
nonlinearity
threshold models
Domar model
JEL: 
E43
E62
H62
Document Type: 
Working Paper

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