The Macroeconomic Effects of Government Debt on Capital Formation in the United States: An Empirical Investigation

Islam, M.Faizul and Hasan, Mohammad S (2007) The Macroeconomic Effects of Government Debt on Capital Formation in the United States: An Empirical Investigation. Manchester School, 75 (5). pp. 598-616. ISSN 1463-6786. (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1111/j.1467-9957.2007.01032.x

Abstract

In this paper we empirically examine the effects of government debt on interest rate, price, output and capital formation in the USA during the post-war period. Using co-integration methodology supplemented with variance decompositions and impulse response functions, the study found a long-run equilibrium as well as a strong feedback relationship between real debt and real capital formation. The results also indicate that public debt increases inflation with adverse effects on capital formation and real output which broadly support the views of 'monetarists', and partially of the neo-Ricardian economists.

Item Type: Article
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: Rebecca Stevenson
Date Deposited: 06 Jan 2010 11:51
Last Modified: 22 May 2014 07:31
Resource URI: http://kar.kent.ac.uk/id/eprint/23567 (The current URI for this page, for reference purposes)
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