Journal Article

Federal deficits and the stock market

Abstract: Empirical evidence shows that federal budget deficits have historically tended to increase stock market prices. Because deficits rose to unprecedented levels in the 1980s, however, increasing concern about their impact on interest rates and inflation may have contributed to the October 1987 decline in stock prices.

Keywords: Deficit financing; Budget; Stock market;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 1988

Volume: 73

Issue: Apr

Pages: 17-27