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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
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    File URL: https://mpra.ub.uni-muenchen.de/58477/1/MPRA_paper_58477.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Jesse Burkhead, 1954. "The Balanced Budget," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 68(2), pages 191-216.
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    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

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