2. On September 21, 1995, House Speaker Newt Gingrich threatened to send the United States into default

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2. On September 21, 1995, “House Speaker Newt Gingrich threatened to send the United States into default on its debt for the first time in the nation’s history, to force the Clinton Administration to balance the budget on Republican terms”

(New York Times, September 22, 1995, p. A1).

That same day, the interest rate on 30-year U.S. government bonds rose from 6.46 to 6.55 percent, and the dollar fell in value from 102.7 to 99.0 yen. Use the model of the large open economy to explain this event.

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Macroeconomics And The Financial System

ISBN: 9781429253673

1st Edition

Authors: N. Gregory Mankiw, Laurence Ball

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