Do Debt Levels Influence State Borrowing Costs?
Article first published online: 12 MAR 2012
Copyright © 2012 The American Society for Public Administration
Public Administration Review
Volume 72, Issue 4, pages 498–505, July/August 2012
How to Cite
Robbins, M. D. and Simonsen, B. (2012), Do Debt Levels Influence State Borrowing Costs?. Public Administration Review, 72: 498–505. doi: 10.1111/j.1540-6210.2011.02548.x
- Issue published online: 13 JUN 2012
- Article first published online: 12 MAR 2012
This article reports on research into the possible interest cost penalties when state governments impose increasingly high debt levels on their citizens. The potential effect of debt levels on borrowing costs is a material one, given the large amounts of state debt outstanding. At the same time that government borrowing is heavy, the demand for government obligations also appears to be strong. The authors examine state debt levels and borrowing costs over a six-year period (2001–2006) and find little evidence of such an effect, despite rapidly growing debt burdens. Those concerned about state debt levels, the authors say, must look to sources other than investors for pressure to reduce debt issuance.