GOVERNMENT BORROWING, INTEREST RATES, AND THE CROWDING OUT EFFECT IN AN OPEN ECONOMY

Abstract

This research applies the loanable funds theory in an international framework to investigate government borrowing's effect on U.S. interest rates. The equations estimated offer little support for the hypothesis that government borrowing raises interest rates and no evidence that inflows of foreign capital offset the effect of government borrowing.

Citation

Adrangi, B. and Easton, T. (1993), "GOVERNMENT BORROWING, INTEREST RATES, AND THE CROWDING OUT EFFECT IN AN OPEN ECONOMY", Studies in Economics and Finance, Vol. 15 No. 1, pp. 3-28. https://doi.org/10.1108/eb028706