A study by Thomas Laubach 20 based on US data, for example, estimates that every percentage point increase in the projected deficit-to-GDP ratio results in an increase in long-term interest rates of 20 to 29 basis points, whereas a percentage point increase in the debt-to-GDP ratio is associated with an increase of about 3 to 4 basis points.
In turn, the appreciation of the euro against the dollar – by 12% from the through in September and 4% since the December projections – further reduces the cost of dollar-denominated commodities and other inputs imported in the euro area[8].