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1 Alan Cole, Deficit, Interest Rates, and Growth 1 (2016)

handle is hein.taxfoundation/defirgro0001 and id is 1 raw text is: TAXS The Deficit, Interest Rates, FOUNDATION FISCAL and Growth FACT By Alan Cole No. 503 Economist Mar. 2016 Key Findings The effects of budget deficits on economic growth is an important topic in macroeconomic analysis of tax policy. Some economic theories suggest that budget deficits reduce growth by increasing interest rates and diverting private saving from investment to government debt. It has been hard to find an empirical link between deficits and increased interest rates or reduced investment in practice. Interest rates have, in fact, remained low for many years, even as deficits were high. Theories about deficits and investment should be reexamined to consider the implications of a large global supply of savings. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) non profit organization. ©2016 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Melodie Bowler Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org