What are the risks associated with long-term fixed-rate borrowing when interest rates might fall?

... intertemporal budget constraint of the consolidated government sector (central bank and governments). This is the consequence of the constraint being a ... It does not respect intertemporal budget constraints and therefore cannot be microfounded in a dynamic model. It ignores the downward pressure on consumption ... The basic idea of intertemporal choice of consumption is to understand how the consumer interacts with the capital market. II. INTERTEMPORAL BUDGET CONSTRAINT. US monthly data, for the period 1951-1984, are used to test a key element of the. Ricardian equivalence doctrine, namely the government's intertemporal budget. Nov 26, 2024 ... The government intertemporal budget constraint is a stock-flow relationship determing the debt dynamics. Consider the general case in which ... to an intertemporal budget constraint. Whatever solution approach one employs — the calculus of variations, optimal control theory or dynamic programming ... to an inter-temporal budget constraint, stock of assets, and limits on borrowing. If, at an instant of time, returns to capital are relatively high, the ... Sep 14, 2020 ... That theory is built around the “intertemporal budget constraint,” which essentially states that in the long run, and in present values, the ... The theoretical model of the intertemporal budget constraint suggests that when the rate of return rises, the quantity of saving may rise, fall, or remain the ... Bt ≥ −. ¯. B or Ct ≤ Wt. Intertemporal budget constraints. • Relate the borrowing constraint to ability to pay. • A complete-markets notion. • Firm: market ...