IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/58477.html
   My bibliography  Save this paper

The Real Interest Rate Yield on Long Term Municipals: What is the Role of Budget Deficits?

Author

Listed:
  • Cebula, Richard
  • Merrick, Shelley

Abstract

This study empirically finds, using ECM, that the primary federal budget deficit shares a bi-directional relationship with the ex ante real interest rate yield on long term municipal bonds. That is, the primary budget deficit acts to raise the real municipal bond yield whereas that yield also acts to raise the primary deficit.

Suggested Citation

  • Cebula, Richard & Merrick, Shelley, 2002. "The Real Interest Rate Yield on Long Term Municipals: What is the Role of Budget Deficits?," MPRA Paper 58477, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58477
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/58477/1/MPRA_paper_58477.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. E. J. Mishan, 1963. "How to Make a Burden of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 71(6), pages 529-529.
    2. Silber, William L, 1970. "Fiscal Policy in IS-LM Analysis: A Correction," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 2(4), pages 461-472, November.
    3. Jesse Burkhead, 1954. "The Balanced Budget," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 68(2), pages 191-216.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cebula, Richard J, 1973. "Deficit Spending, Expectations, and Fiscal Policy Effectiveness," Public Finance = Finances publiques, , vol. 28(3-4), pages 362-370.
    2. Sally A. Asefa & Roy D. Adams & Dennis R. Starleaf, 1981. "Municipal Borrowing: Some Empirical Results," Public Finance Review, , vol. 9(3), pages 271-280, July.
    3. Hager, Sandy Brian, 2013. "Public Debt, Ownership and Power: The Political Economy of Distribution and Redistribution," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 157991, September.
    4. Pierre Duguay & Yves Rabeau, 1989. "Les effets macro-économiques de la politique budgétaire : de Keynes à la synthèse néo-classique," Revue Économique, Programme National Persée, vol. 40(4), pages 597-620.
    5. Benjamin M. Friedman, 1979. "The Determination of Long-Term Interest Rates: Implications for Monetary and Fiscal Policies," NBER Working Papers 0366, National Bureau of Economic Research, Inc.
    6. Sheikh, Munir A. & Grady, Patrick & Lapointe, Paul H., 1980. "L’efficacité de la politique budgétaire en économie ouverte," L'Actualité Economique, Société Canadienne de Science Economique, vol. 56(4), pages 499-534, octobre-d.
    7. Krishanu Pradhan, 2016. "Ricardian Approach to Fiscal Sustainability in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 10(4), pages 499-529, November.
    8. Pierre Gravot, 1980. "Les incertitudes de la politique économique en économie ouverte," Revue Économique, Programme National Persée, vol. 31(2), pages 258-286.
    9. Shobande Olatunji Abdul, 2020. "Fiscal Rule in Africa," Open Economics, De Gruyter, vol. 3(1), pages 112-120, January.
    10. Antal Deutsch, 1975. "On the Taxation of Life Income," Public Finance Review, , vol. 3(4), pages 299-319, October.
    11. Shobande Olatunji Abdul, 2020. "Fiscal Rule in Africa," Open Economics, De Gruyter, vol. 3(1), pages 112-120, January.
    12. Bertrand Lemennicier, 1973. "La contrainte budgétaire de l'Etat et l' « Optimal Policy Mix » en régime de change fixe et flexible," Revue Économique, Programme National Persée, vol. 24(3), pages 473-504.
    13. Peter Sinclair, 2016. "Ezra Mishan, Contrarian And Sage: An Appreciation," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(03), pages 1-9, June.
    14. Bischi, Gian Italo & Giombini, Germana & Travaglini, Giuseppe, 2022. "Monetary and fiscal policy in a nonlinear model of public debt," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 397-409.
    15. Hager, Sandy Brian, 2016. "Public Debt, Inequality and Power. The Making of a Modern Debt State," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 157976, December.
    16. Sharon J. Erenburg, "undated". "Linking Public Capital to Economic Performance, Public Capital: The Missing Link Between Investment and Economic Growth ," Economics Public Policy Brief Archive 14, Levy Economics Institute.
    17. Forrest Capie & Geoffrey Wood, 2021. "Debt, deficits, and inflation," Economic Affairs, Wiley Blackwell, vol. 41(1), pages 38-50, February.
    18. Brian Motley, 1983. "Real interest rates, money and government deficits," Economic Review, Federal Reserve Bank of San Francisco, issue Sum, pages 31-45.
    19. V. Vance Roley, 1983. "Asset Substitutability and the Impact of Federal Deficits," NBER Working Papers 1082, National Bureau of Economic Research, Inc.
    20. Rabia Rafique & Asad Nisar & Syed Sadaqat Ali Shah, 2024. "Testing the effects of fiscal policy shocks on output growth in recession and expansion: empirical evidence from developing countries," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-26, June.

    More about this item

    Keywords

    real interest rate yield on municipal bonds; federal budget deficit; crowding out;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:58477. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.