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- Title
INTEREST RATES, EXPECTED FUTURE DEFICITS AND TAX PROPOSALS.
- Authors
Johnson, Colleen F.
- Abstract
Several recent publications have presented evidence suggesting a negative wealth effect in response to federal deficits. This paper investigates the hypothesis that rational economic agents use the legislative process to forecast the future path of federal deficits and then act on that information. A tax legislation variable, included in a reduced form interest rate equation, is tested for significance. The legislative variable that mirrors the effects of current and past deficits is often significant.
- Subjects
BUDGET deficits; TAX laws; INTEREST rates; ECONOMICS
- Publication
Economic Inquiry, 1991, Vol 29, Issue 1, p190
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.1991.tb01265.x