Since the Seventies, increases in public debt and deficits have raised concern about their effects on interest rates. Growing public debt and persistent deficits would have led to inflation pressures, which would have forced central Banks to raise the short-term interest rate. Expectations of these pressures by financial markets would involve a rise in long-term interest rates and crowding-out effects. This paper studies the fiscal policy effects on interest rates from a theoretical and empirical point of view. Fiscal policy effects mainly depend on the full-employment hypothesis, the type of shocks affecting the economy, the type of fiscal policy, and agents' expectations about it. The estimated effects of fiscal policy variables in central Banks' reaction functions and long-term interest rate equations for the United States, the United Kingdom, Germany and Japan for the 1980-2003 period show that these effects are not mechanical and vary from one country to another. All in all, fiscal policies would not have entailed a generalized increase in real interest rates over that period.

/pdf/fiscal-policy-and-interest-rates-3cssa33pxc.pdf

Fiscal Policy and Interest Rates

The thesis deals with the formation of expectations of economic policy in the term structure of interest rates. The first chapter studies the determination of the term structure of interest rates in a macroeconomic framework. The second chapter studies the Central banks' communication effects on interest rates. We explain why they refuse to unambiguously announce the future level of the funds rate. Then we distinguish the effect of decisions from the effect of future monetary policy announces on the term structure of interest rates in the Euro Zone and the United States. In the third chapter, we assess the fiscal policy effects on interest rates. According to us, fiscal policies would not have had any effect on the short term rate set by Central banks. Fiscal policies would also not have raised real long term interest rates over the studied period. The fourth chapter deals with explanations of the low level of the US long-term interest rate. We quantify the Conundrum, and we show that the strong rise in Foreigners' long-term Federal debt purchases can explain a part of the Conundrum. In the fifth chapter, we study the links between the equilibrium exchange rate, the long term rate and economic policy in a small open economy. We build up a theoretical model with time consistent economic policies. We show that the equilibrium real exchange rate and the equilibrium long term rate are contingent on policymakers' preferences.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1133929_code497164.pdf?abstractid=1133929&mirid=1&type=2

Term Structure of Interest Rates and Expectations of Economic Policy (Structure Par Terme Des Taux D'Interet Et Anticipations De La Politique Economique)

Depuis les annees 1970, la montee des deficits et des stocks de dette publique a conduit les economistes a soulever la question de leurs effets sur les taux d’interet. La dette croissante et les deficits recurrents auraient engendre des pressions inflationnistes, ce qui aurait contraint les banques centrales a augmenter le taux de court terme. Les marches financiers anticipant la persistance de ces tensions, cela conduirait a une hausse des taux longs et a des effets d’eviction. Cet article analyse les effets de la politique budgetaire sur les taux d’interet d’un point de vue theorique et empirique. Ces effets reposent principalement sur l’hypothese de plein emploi, le type de politique budgetaire menee et les anticipations des agents la concernant. L’estimation des effets des variables de politique budgetaire dans les fonctions de reaction des banques centrales et dans les equations de taux de long terme pour les Etats-Unis, le Royaume-Uni, l’Allemagne et le Japon sur la periode 1980-2003 montre que ces effets ne sont pas automatiques et varient d’un pays a l’autre. Globalement, les politiques budgetaires n’auraient pas provoque de hausse des taux d’interet reels sur la periode.

/pdf/politique-budgetaire-et-taux-d-interet-248vnhh67k.pdf

Politique budgétaire et taux d'intérêt

Despite the multiplicity of research on the surge of the financial industry the world over, little is done to understand the national context shaping the objectives and designs of this economic sector. The overall image that emerges from the literature is that globalisation and liberalisation of economies make the expansion of this sector indispensable for further development. This paper stresses the heterogeneity of the socio-psychological origins of the need for saving and contribution management, as well as the heterogeneity of the sources of savings and loan funding. In particular this paper discusses the following national characteristics: 1) the social belief in trust that smoothes the progress of insurance and pension fund business in the USA, 2) the traditional preference for saving and lending in France that explains the advance of banks and credit institutions for analysis of financial risks, and 3) the natural resources ground rent of Russian State provides the formation of sovereign-wealth funds, which require an up to date knowledge based investment management. This paper serves as a road sign indicating that the path of uniform financial industry formation is a waste of time and may bring about social and economic troubles.

https://halshs.archives-ouvertes.fr/halshs-00586852/document

The formation of financial industries in USA, France and Russia

We focus on current or future financials reforms impacts on the formation of interest rates in Central Africa. These reforms aim to restore the efficient operation of the interest rate channel and to revitalize credit channels and asset prices through the development of the financial system and the abandonment of the principle of double intervention by the central bank. For this purpose, we have built a CEMAC DSGE model with a financial accelerator phenomenon on the credit demand side and a collateral constraint on the supply side. The simulations carried out on the intensification of the financial inclusion of firms and households, the collateral reform and the quality of information show an improvement of: (i) banking relay of monetary impulses on the interbank market; (ii) the central bank's reaction to different shocks and; (iii) the response of costs and returns of financial assets to these shocks. However, the disconnection of the variables from the real sphere to the monetary impulses ultimately raises the need for a financial education strategy, beyond the problem of the fragmentation of the money market that needs to be addressed.

/pdf/reformes-financieres-et-formation-des-taux-d-interet-en-5e7nzg5j1o.pdf

Réformes financières et formation des taux d’intérêt en Afrique Centrale : une approche à travers le modèle DSGE

Artus Patrick, Ducos Philippe, Pollin Jean-Paul, Bellando Raphaelle. Formation des taux d'interet a long terme. In: Revue d'economie financiere, n°12-13, 1990. Articles divers. pp. 46-69.

Formation des taux d'intérêt à long terme

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Formation des taux d'intérêt à long terme