The determinants of the tax-adjusted real interest rate

Article Abstract:

An IS-LM-AS model is used to derive a reduced-form real interest rate equation to explore the relationship between real interest rates, the federal debt, supply shocks, monetary policy and other variables. Empirical evidence shows that there is a positive relationship between the federal debt coefficient and the real interest rate in the levels form of the equation. After the equation is first-differenced, the federal debt and supply shock coefficients indicate a positive and significant relationship.

Interest rates, National debt, Public debts, Budget deficits

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Capital complementarity, time-to-build, and the persistence of investment starts

Article Abstract:

The capital complementarity hypothesis is incorporated into the time-to-build propagation theory as a means of explaining the persistence of investment starts. It is argued that since large projects require small structures, the persistence of investment starts is due to the fact that smaller structures 'would be started after the start of the larger project.' As proof, US Commerce Dept. data on four starts series are analyzed.

Capital investments, Macroeconomics

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