Breve nota su disavanzo pubblico e tassi d’inte¬resse reali - A Short Note on Public Deficit and Real Interest Rates

A Short Note on Public Deficit and Real Interest Rates This note considers the effects of wide PSBRs on real interest rates in Italy. In the first part of the paper, following a traditional IS-LM model, we prove econometrically that in the Eighties the largo volume of PSBRS contributed to raise the real interest rate owing to the effects on the aggregate demand and the related increase in the demand for money. In the second part we try to ascertain whether the largo amount of public debt outstanding implies a risk premium on securities issued. by the Government.