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Article
Peer-Review Record

Economic Freedom, Budget Deficits, and Perceived Risk from Larger National Debt-to-GDP Ratios: An Exploratory Analysis of Their Real Interest Rate Effects

J. Risk Financial Manag. 2024, 17(10), 469; https://doi.org/10.3390/jrfm17100469
by Richard J. Cebula
Reviewer 1: Anonymous
Reviewer 2: Anonymous
J. Risk Financial Manag. 2024, 17(10), 469; https://doi.org/10.3390/jrfm17100469
Submission received: 21 September 2024 / Revised: 15 October 2024 / Accepted: 16 October 2024 / Published: 17 October 2024

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Please find attached the review in the attachment

Comments for author File: Comments.pdf

Author Response

Please see attached letter. I agree with all of your suggestions and found then very useful. I appreciate your time and effort--it definitely improved the quality of my paper, which I hope you will approve. In order of your comments, the revisions are, as follows [the letter I sent more fully describes the revisions]:

I substituted the appropriate symbol for the error term as you suggested. 

I also corrected the dates [which were TYPOS] on the data set within the text and Abstract. Indeed, I even added an estimate using the Economic Freedom of North America index, which covers a longer time period. The Conclusions were unchanged. The latter is part of the new Table 3.

I deleted the repetition of the 3 hypotheses from the Conclusion.

Equations (6) and (8) are no longer numbered. I renumbered the remaining equations to reflect this.

I combined Tables 2 and 3 into a new Table 2; I combined Table 5 and 6 into a new Table 3.

I combined the VIFs from Canada and the U.S. into the same table, Table 1. 

The text has been changed to reflect all of these consolidated Tables.

Thank you once again for your time and effort.

 

Appreciatively,

 

Richard Cebula

 

 

 

Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

The topic and analysis of the manuscript are interesting and significant in this study area. However, there seems to be much room to be improved for academic publication. The followings are the suggestions for the improvements.

 

1.     The author deals with two neighboring and highly integrated nations, Canada and the U.S. The model construction should consider the property of open economies in both countries. Thus. the discussions are needed on the reasons for assuming a single closed economy in the author’s modelling, in particular, the reason why exchange rates are out of targets in the loanable fund model. I guess that the short-term variables are excluded due to its equilibrium as a strong assumption.

2.     The theoretical model the author presented has several defects. First, the equation (1) and (2), which are usually used for analyzing public debt sustainability, have no linkage with the subsequent equations. Second, no explanations on ECONFREE and EFI are provided. Are they the same variables or different ones? And EFI, which seems to be a key variable in this study, lacks its description: how this indicator is developed and compiled. Third, no explanation on UNRATE is given (though readers can guess unemployment rate).

3.     Regarding the empirical part, a time-series analysis usually requires the data property of stationarity so that it avoids a spurious estimation. Thus, the study should include a unit root test or a cointegration test in case that the integration level is verified I(1).

Author Response

Thank you. Please see the attached file.

Author Response File: Author Response.docx

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

The manuscript has been sufficiently improved following my comments.

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