{
  "title": "Government Debt and Long-Term Interest Rates",
  "publication": "IMF Working Papers, March 1, 2006",
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  "summary": "This paper examines the relationship between government debt and long-term interest rates. A dynamic general equilibrium model that incorporates debt nonneutrality is specified and solved, and numerical simulations using the model are undertaken.",
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    {
      "heading": "Summary",
      "content": "- Author: Noriaki Kinoshita\n- Date: March 1, 2006\n- Main focus: examines the relationship between government debt and long-term interest rates.\n- Core conclusion: simulated and estimated interest rate effects of government debt tend to be small; however, an increase in government consumption and debt leads to a considerably larger effect. The paper argues that, although the interest rate effects of pure crowding out may be limited, the economic impact of accumulating government debt cannot be ignored."
    },
    {
      "heading": "Methodology",
      "content": "- Theoretical approach:\n  - Specifies and solves a dynamic general equilibrium model that incorporates debt nonneutrality.\n  - Conducts numerical simulations using the model.\n- Empirical approach:\n  - Uses panel data for 19 industrial countries to estimate relationships and assess support for theoretical predictions."
    },
    {
      "heading": "Key findings and results",
      "content": "- Empirical estimation and simulations provide some evidence supporting the theoretical predictions.\n- The simulated and estimated interest rate effects of government debt tend to be small.\n- An increase in government consumption combined with increased government debt leads to a considerably larger interest rate effect.\n- The paper emphasizes that pure crowding-out interest rate effects may be limited, but the broader economic consequences of accumulating government debt are significant."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subjects: Financial services; Government consumption; Government debt management; Long term interest rates; National accounts; Public debt; Public financial management (PFM); Real interest rates\n- Keywords: crowding out; crowding-out effect; debt; debt level; debt measure; debt neutrality; dynamic general equilibrium model; Government consumption; Government debt; Government debt management; government debt result; increase in government debt; interest rate effects of an increase; Long term interest rates; long-term interest rates; physical capital; production function; Real interest rates; results from an increase; simulated interest rate effect; simulated interest rate effect of government debt; steady-state interest rate effects; WP; yield\n\n---\n\n Content in this bundle\n\n- wp0663\n  - wp0663 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0663 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/government-debt-and-long-term-interest-rates-18866"
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    "Authors: Noriaki Kinoshita",
    "Published: March 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451863239.001",
    "Author: Noriaki Kinoshita",
    "Date: March 1, 2006",
    "Main focus: examines the relationship between government debt and long-term interest rates.",
    "Core conclusion: simulated and estimated interest rate effects of government debt tend to be small; however, an increase in government consumption and debt leads to a considerably larger effect. The paper argues that, although the interest rate effects of pure crowding out may be limited, the economic impact of accumulating government debt cannot be ignored.",
    "Theoretical approach:",
    "Empirical approach:",
    "Empirical estimation and simulations provide some evidence supporting the theoretical predictions.",
    "The simulated and estimated interest rate effects of government debt tend to be small.",
    "An increase in government consumption combined with increased government debt leads to a considerably larger interest rate effect.",
    "The paper emphasizes that pure crowding-out interest rate effects may be limited, but the broader economic consequences of accumulating government debt are significant.",
    "Subjects: Financial services; Government consumption; Government debt management; Long term interest rates; National accounts; Public debt; Public financial management (PFM); Real interest rates",
    "Keywords: crowding out; crowding-out effect; debt; debt level; debt measure; debt neutrality; dynamic general equilibrium model; Government consumption; Government debt; Government debt management; government debt result; increase in government debt; interest rate effects of an increase; Long term interest rates; long-term interest rates; physical capital; production function; Real interest rates; results from an increase; simulated interest rate effect; simulated interest rate effect of government debt; steady-state interest rate effects; WP; yield",
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