The financial crisis that hit Europe in 2008 affected many spheres of the EU members' economies. It had drastic effects on the countries' economic activity, consumer spending, banking system liquidity, as well as negative impacts on interest rates and budget balances of the EU member states....

This paper studies the main channels through which interest rate normalization has fiscal implications in the United States. While unexpected inflation reduces the real value of government liabilities, a rising policy rate increases government financing needs because of higher interest payments...