Interest Rates and Budget Deficits

Despite no conclusive evidence, there is widespread belief that the high interest rates of the 1980s and 1990s in the developed world have been caused by high budget deficits. Interest Rates and Budget Deficit systematically examines this and other questions relating to the behavior of real interest rates in eleven developed countries. The results show that generalizations across the countries can be hazardous and strongly suggests that factors specific to individual countries are still of vital importance.