{
  "title": "How Important are Debt and Growth Expectations for Interest Rates?",
  "publication": "IMF Working Papers, May 1, 2015",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890",
  "overlayPath": "/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/index.md",
  "summary": "This paper uses a dataset on private-sector risk aversion as well as expectations of long-run growth and debt to explain trends in implied forward rates on government bonds in the G-7 countries.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- This paper uses a dataset on private-sector risk aversion as well as expectations of long-run growth and debt to explain trends in implied forward rates on government bonds in the G-7 countries.\n- Results show that a one-percent rise in the long-run projected debt-to-GDP ratio causes an increase in bond yields of a relatively modest 1-to-6 basis points.\n- Shocks to growth expectations and risk aversion have been comparatively more successful in explaining the behavior of long-term rates.\n- The findings imply that growth policies rather than long-run projections of fiscal outcomes may be more important in helping influence long-term borrowing costs."
    },
    {
      "heading": "Key findings and statistics",
      "content": "- A one-percent rise in the long-run projected debt-to-GDP ratio → increase in bond yields of 1-to-6 basis points.\n- Shocks to growth expectations and to private-sector risk aversion explain long-term rate behavior more effectively than long-run debt projections."
    },
    {
      "heading": "Policy implications",
      "content": "- Emphasis on growth policies as a lever to influence long-term borrowing costs.\n- Long-run projections of fiscal outcomes appear less influential for long-term interest rates than changes in growth expectations and risk aversion.\n\n---\n\n Content in this bundle\n\n- Wp1594\n  - Wp1594 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp1594 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/bundle-manifest.json)",
    "Authors: Sohrab Rafiq",
    "Published: May 1, 2015",
    "Series: IMF Working Papers",
    "This paper uses a dataset on private-sector risk aversion as well as expectations of long-run growth and debt to explain trends in implied forward rates on government bonds in the G-7 countries.",
    "Results show that a one-percent rise in the long-run projected debt-to-GDP ratio causes an increase in bond yields of a relatively modest 1-to-6 basis points.",
    "Shocks to growth expectations and risk aversion have been comparatively more successful in explaining the behavior of long-term rates.",
    "The findings imply that growth policies rather than long-run projections of fiscal outcomes may be more important in helping influence long-term borrowing costs.",
    "A one-percent rise in the long-run projected debt-to-GDP ratio → increase in bond yields of 1-to-6 basis points.",
    "Shocks to growth expectations and to private-sector risk aversion explain long-term rate behavior more effectively than long-run debt projections.",
    "Emphasis on growth policies as a lever to influence long-term borrowing costs.",
    "Long-run projections of fiscal outcomes appear less influential for long-term interest rates than changes in growth expectations and risk aversion.",
    "**Wp1594**"
  ],
  "related": [
    {
      "title": "Wp1594",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2015/_wp1594.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2015/_wp1594.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2015/_wp1594.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/index.md",
    "json": "/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/31/how-important-are-debt-and-growth-expectations-for-interest-rates-42890/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T15:42:30.690Z"
}