This paper uses a dataset on private-sector risk aversion as well as expectations of long-run
growth and debt to explain trends in implied forward rates on government bonds in the G-7
countries. The results show, consistent with the literature, that a one-percent rise in the long-run
projected debt-to-GDP ratio causes an increase in bond yields of a relatively modest 1-to-6 basis
points. Shocks to growth expectations and risk aversion have been comparatively more
successful in explaining the behavior of long-term rates. The findings imply that growth policies
rather than long-run projections of fiscal outcomes may be more important in helping influence
long-term borrowing costs.