Friday, September 17, 2010

One in the eye for Hockeynomics

Treasury Working Paper 2010-04:

Reconsidering The Link Between Fiscal Policy And Interest Rates In Australia

Friday, 17 September 2010

"This paper examines the empirical relationship between government debt and the real interest margin between Australian and US 10 year government bond yields. Results for the period 1990 to 2009 suggest that Australian general government net debt has no impact on the short run real interest margin, and has only a small effect in the long run. Further, the estimates suggest that movements in US general government net debt have a considerably larger effect than Australian general government net debt — implying that US influences take greater prominence in explaining the real interest margin."

Treasury Working Paper 2010 04

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