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The Impact of the Federal Budget Deficit on the Nominal Interest Rate Yield on US Treasury Notes, 1979-2001

Cebula, Richard (2003): The Impact of the Federal Budget Deficit on the Nominal Interest Rate Yield on US Treasury Notes, 1979-2001. Published in: The ICFAI Journal of Applied Economics , Vol. 3, No. 2 (31. March 2004): pp. 7-18.

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Abstract

This study empirically examines the impact of the federal government budget on the nominal interest rate yield on US Treasury notes over the 1979-2001 period. In a system that includes the monetary base, the civilian labor force unemployment rate, the ex ante real 52 week Treasury bill rate, and the percentage growth rate of the S&P 500 stock index, Error-Corrections Model (ECM) estimation finds that the total federal budget deficit acted to increase the nominal interest rate yield on seven year US Treasury notes over the study period.

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