Interest Rate Risk and Other Determinants of Post-WWII U.S. Government Debt/GDP Dynamics
35 Pages Posted: 9 Sep 2010
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Interest Rate Risk and Other Determinants of Post-WWII U.S. Government Debt/GDP Dynamics
Interest Rate Risk and Other Determinants of Post-Wwii U.S. Government Debt/Gdp Dynamics
Date Written: September 7, 2010
Abstract
This paper uses a sequence of government budget constraints to motivate estimates of returns on the U.S. Federal government debt. Our estimates differ conceptually and quantitatively from the interest payments reported by the U.S. government. We use our estimates to account for contributions to the evolution of the debt-GDP ratio made by inflation, growth, and nominal returns paid on debts of different maturities.
Keywords: Holding period returns, capital gains, inflation, growth, debt-GDP ratio, government budget constraint
JEL Classification: H6, E62, C82
Suggested Citation: Suggested Citation
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