Government Debt: Why Has the Government Debt Increased? An Analysis of What Factors Influence the Long-Term Interest Rate?
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
This paper analyzes what factors influence the long-term interest rate, in order to give an understanding of why the government debt has increased in EU member states. It is a statistical study of panel data analyzed by the fixed effect model. The research of the 27 EU member states is based on secondary data from the European Commission; Eurostat and EconStats. The results by the fixed effect model show that government debt, budget deficit and presidential system are significant and have a positive relationship with the long- term interest rate. The growth rate is significant, having a negative relationship with the long-term interest rate and the financial crisis did not increase the long-term interest rate. The results were not entirely consistent with theories and previous studies.
Place, publisher, year, edition, pages
European Union, Eurozone, government debt, bonds, long-term interest rate, panel data, fixed effect model
IdentifiersURN: urn:nbn:se:kau:diva-29051Local ID: NE:2OAI: oai:DiVA.org:kau-29051DiVA: diva2:648365
Subject / course