Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 220: Fiscal Policy and the Yield Curve in a Small Open Economy

Jesper Lindé ()
Additional contact information
Jesper Lindé: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: This paper contains an empirical investigation of the effects of fiscal policy on the yield curve based on a conventional stochastic macro model designed for a small open economy. The empirical investigation undertaken utilizes data for Sweden, a country which has experienced very large fluctuations in the government budget deficits and in the short- and long-term nominal interest rates, thus providing a better empirical test than previous studies. According to the empirical results, larger budget deficits spell higher interest rates, as posited by conventional macroeconomic theory.

Keywords: Term structure of interest rates; Ricardian equivalence; budget deficits; small open economy; stationary and non-stationary time series.

JEL-codes: E12; E62; F41

39 pages, First version: January 28, 1998. Revised: November 17, 1998.

Full text files

hastef0220.rev.pdf.zip PDF-file Full text
hastef0220.rev.pdf PDF-file Full text
hastef0220.rev.ps.zip PostScript file Full text
hastef0220.rev.ps PostScript file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-11 18:19:14.