Munich Personal RePEc Archive

The Real Interest Rate Yield on Long Term Municipals: What is the Role of Budget Deficits?

Cebula, Richard and Merrick, Shelley (2002): The Real Interest Rate Yield on Long Term Municipals: What is the Role of Budget Deficits? Published in: The International Business & Economics Research Conference Program & Proceedings , Vol. 13, No. 1 (30. October 2003): pp. 1-10.

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Abstract

This study empirically finds, using ECM, that the primary federal budget deficit shares a bi-directional relationship with the ex ante real interest rate yield on long term municipal bonds. That is, the primary budget deficit acts to raise the real municipal bond yield whereas that yield also acts to raise the primary deficit.

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