Let's say that, for some reason (a crisis or similar), many first-world countries' states need to emit public debt to be able to pay the services the normally provide (pensions, health etc.).

As I see it, they would be competing with each other to sell these bonds, right? Would this competition make the government bonds' rates to rise?

  • 2
    $\begingroup$ "Would this make the government bonds' rates to rise?" What exactly do you mean by "this"? Sure, if California was the only state on the planet but all the creditors were still there supply and demand dictates it would get lower interest rates. $\endgroup$ – Giskard Apr 27 '20 at 18:54
  • $\begingroup$ I think you should look at other questions on “loanable funds.” The question is to what extent increased borrowing raises interest rates. $\endgroup$ – Brian Romanchuk Apr 28 '20 at 2:23

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.