- Home
- Publications
- Interest Rate Rises And Covid-19 Government Debts
Interest rate rises and Covid-19 government debts
Authors
Related Themes
Macro-Economic Dynamics and PolicyThis is a preview from the Quarterly UK Economic Outlook, May 2021.
The increase in government debt will translate into an increased sensitivity of any debt service costs to interest rate changes but the level of service costs remains low.
To place interest rate rises of the order cited by the Chancellor in their economic context, we used the Institute’s NiGEM model to simulate two scenarios in which rate rises of one percentage point may take place: (1) a positive GDP shock and (ii) a negative term premia shock. No other variables are shocked, and we assume that in both cases the stock of QE each year is unchanged from the OBR baseline – a strong assumption, but one which also underpins
the OBR estimates of rising interest rate costs so is preserved here to aid comparison.
The analysis in this Box has been prepared by NIESR Principal Economist Rory Macqueen.
Please see the full analysis and its findings in the pdf document.
Related Blog Posts
Public Debt Sustainability and Fiscal Rules
Stephen Millard
Benjamin Caswell
05 Feb 2024
4 min read
UK Investment Past and Prospects: A Framework for Analysis
Catherine Mann
01 Dec 2023
6 min read
Related Projects
Related News
Call for Papers: Lessons From Quantitative Easing & Quantitative Tightening
09 Feb 2024
1 min read
Related Publications
Job Boom or Job Bust? The Effect of the Pandemic on Actual and Measured Job and Employment Growth
07 Feb 2024
UK Economic Outlook Box Analysis
Implications of the Transition from Defined Benefit to Defined Contribution Pensions in the UK
07 Feb 2024
UK Economic Outlook Box Analysis
Inflation Differentials Among European Monetary Union Countries: An Empirical Evaluation With Structural Breaks
20 Nov 2023
National Institute Economic Review