The study attempts to examine the effect of fiscal deficit and government debt on interest rates in Sri Lanka over the period of 1977–2018 by using Unrestricted Vector Auto Regression (UVAR) Analysis. The results reveal that there is no significant effect of fiscal deficit and government debt...

Blanchard develops four main arguments concerning the costs of public debt when safe interest rates are low.First, the current US situation in which safe interest rates are expected to remain below growth rates for a long time is more the historical norm than the exception. If the future is like...

This paper investigate conditions under which equity funds can be sustainable source of budget deficit financing in an interest free economy. Our findings show equity fund can be sustainable source of deficit financing when the rate of return on equity fund exceeds the budget deficit expansion...

This paper begins by examining the persistence of movements in the U.S. Government%u2019s budget posture. Deficits display considerable persistence, and debt levels (relative to GDP) even more so. Further, the degree of persistence depends on what gives rise to budget deficits in the first...

This paper deals with the international transmission of the effects of budget deficits on world rates of interest and spending. The model assumes a two-country world within which capital markets are integrated, individuals behave rationally, and the behavior of individuals and governments are...

In this paper, I demonstrate that an indicator which is commonly used to assess the long-term fiscal sustainability of public finances in EU member states (“S2”) is also defined if government borrowing rates are assumed to be permanently lower than the growth rate of GDP. I illustrate this...