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- Title
GOVERNMENT DEBT AND THE DEMAND FOR MONEY: AN EXTREME BOUND ANALYSIS.
- Authors
Hegji, Charles E.; Moberly, H. Dean
- Abstract
The article provides evidence that there is a relationship between government debt and interest rates via the demand for money. This relationship is examined through the wealth effect of government debt on money demand, and the robustness of the results is tested by the use of extreme bound analysis in addition to standard econometric techniques. We find that OLS regression shows government debt affecting the demand for money positively,implying that Federal government debt is net wealth. In addition, the extreme bound analysis shows that the estimates of the government debt coefficient are robust under alternative specifications of the Goldfeld model.
- Subjects
PUBLIC debts; INTEREST rates; DEMAND for money
- Publication
Economic Inquiry, 1990, Vol 28, Issue 2, p390
- ISSN
0095-2583
- Publication type
Article