The CP links less to the DA than the aff

Comparing changes in budget deficits to changes in interest rates is not a valid way to determine whether budget deficits affect interest rates. That is because there are many other factors that also affect interest rates, such as the state of the economy. To determine the effect of budget deficits on interest rates, these other factors must be held constant using statistical methods. Otherwise, the effect of budget deficits on interest rates could be misestimated or even reversed.

Empirical evidence on a link between budget deficits and interest rates is mixed. There is not a consensus among economists on how to model the economy and what relevant variables should be included. Therefore, conclusions drawn from empirical evidence vary widely. More recent evidence tends to find a stronger, positive relationship between the two. In addition, 10 major forecasting models all predict that a budget deficit would increase interest rates. According to Gale and Orszag (2002), the models predict that a budget deficit equal to 1% of GDP would increase interest rates, with a range of 0.1-1 (mean=0.52) percentage points after one year and 0.05-2 (mean=0.99) percentage points after 10 years. This report will be updated.