Concern about global imbalances has been building since the 1990s and analysts from a variety of disciplines have called attention to aspects of the problem ranging from the unsustainability of the US current account position to the role of “under ” and “over”

On Friday, August 5, 2011 Standard and Poor’s rating agency downgraded long-term U.S. Treasury debt from AAA to AA+ for the first time in history. In this study, the impact of this downgrade on world stock markets is examined. We analyze the immediate effect of this downgrade on leading stock

the UCLA Anderson School and the NBER. Alvaro Garcia Marin is with the Universidad de Chile. We are grateful for the capable research assistance of Colton Herbruck, Scott Longstaff, and Yuji Sakurai. All errors are our responsibility. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

spreads, with most of the remainder attributable to a single systematic factor. Similarly, Duffie and Singleton (1999) find that both credit-risk and liquidity factors are necessary to explain innovations in U.S. swap rates. However, when analyzing the residuals they are unable to find explanatory factors

As a share of GDP, the U.S. Federal debt held by the public exceeds 50 percent in FY2009, the highest debt ratio since 1955. Projections indicate the debt ratio may be in the 70-100 percent range within ten years. In many respects, the temptation to inflate away some of this debt burden is similar

Projections indicate the U.S. Federal debt held by the public may exceed 70-100 percent of GDP within ten years. In many respects, the temptation to inflate away some of this debt burden is similar to that at the end of World War II. In 1946, the debt ratio was 108.6 percent. Inflation reduced

The La Follette School takes no stand on policy issues; opinions expressed in this paper reflect the views of individual researchers and authors. Financing U.S. Debt: Is There Enough Money in the World – and At What Cost?

The rapidly growing federal government debt has become a concern for policy makers and the public. Yet the U.S. government has seemingly unbounded access to credit at low interest rates. Historically, Treasury yields have been below the growth rate of the economy. The paper examines

The U.S. national debt now exceeds 100 percent of gross domestic product. Given that a significant amount of this debt is the result of governmental efforts to mitigate the effects of the financial crisis, the recession, and the anemic recovery, it is tempting to think that the debt problem is a

of output, budget de…cits, and debt in the U.S. economy under di¤erent tax policies. While this framework is relatively simple, it incorporates the general equilibrium e¤ects of tax policy, which are often missing from the Congressional Budget O ¢ ce projections. Our results show that debt-to-GNP ratios