Does it matter who finances the government’s debt?
· dallasfed.org
Government debt financed from domestic savings has a smaller effect on interest rates than government debt financed from foreign borrowing, and nations that are net international creditors can borrow more cheaply than net international debtors. These observations help explain massive government borrowing since 2008 while bond yields remained persistently low.
Does it matter who finances the government’s debt?
Scott Davis and Lillian Derr
Government debt and deficits have surged dramatically since the Global Finan...