When a government decides to spend more money than it makes in taxes, it must borrow money from whoever will lend to it to close the gap. This project is a inquiry into what determines the cost of that borrowing for sovereign nations. While the media is fixated on reducing the national debt and deficit, this project finds that maintaining long-term fiscal sustainability may be more complicated. Based on a series of regressions, various macroeconomic fundamentals (Debt, Deficit, Per Capita GDP, GDP Growth Rate, etc.) are empirically tested to find if borrowing costs for economically-developed nations are reflective of what theory suggests they should be.
