Abstract
This paper examines the reasons for the dramatic increase in real interest rates in the world economy observed over the 1978 to 1984 period. The authors find little evidence to suggest that budget deficits can be blamed for the increase in worlwide real interest rates. The structural inflation-adjusted budget deficits of the major OECD nations has not changed appreciably since 1978. Rather, the authors are led to explain high real interest rates in terms of the combined effect of tigh monetary policies and the increased attractiveness of investment. The importance of the later factor is evidenced by the strong performance of stock markets and investment around the world in the face of high real interest rates.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
