Fiscal Policy and Interest Rates in the European Union

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Edward Elgar, Jan 1, 1996 - Business & Economics - 203 pages
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This volume aims to provide a comprehensive study concerned with the potential effects of fiscal policy on financial markets in the European Union. It takes into account the gradual liberalization of capital movements throughout Western Europe and the institutional framework of the European Monetary System. The author looks at the impact of budget deficits on interest rates, especially in relation to international financial integration and concludes that the increases in European budget deficits since the 1970s have raised interest rates in the long term throughout the Union. He argues that balanced budget deficits are necessary to maintain low interest rates.

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Fundamental determinants of interest rate differentials
Theory determinants and measurement

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