An Empirical Investigation on the Effect of Long Term Debt on Country Bond Yields
Faculty Mentor(s)
Dr. John Lunn, Hope College
Document Type
Poster
Publication Date
4-15-2011
Abstract
Investors take into account many different types of data when determining what interest rates they will pay on bonds of a given country, including the absolute level of debt. Regression results using debt as a percentage of GDP and other variables in order to estimate interest rates for a country showed that total debt is significant. However, the coefficient was negative, indicating that countries with higher levels of debt tend to pay lower interest rates for other reasons.
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