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Monetary Policy And Long‐Term Interest Rates: A Survey Of Empirical Literature

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  • M. A. Akhtar

Abstract

This paper surveys recent empirical literature on effects of monetary policy on long‐term interest rates. Most studies reviewed here suggest that tightening monetary policy results in higher long‐term interest rates. But available evidence suffers from conceptual and empirical problems and fails to indicate the magnitude of short‐run and long‐run policy effects on long rates. Also, recent studies have not investigated the possibility of shifts in recent‐year effects of monetary policy on long rates. Finally, the paper offers a policy perspective on limitations of existing evidence and suggests future research on monetary policy effects on long rates.

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  • M. A. Akhtar, 1995. "Monetary Policy And Long‐Term Interest Rates: A Survey Of Empirical Literature," Contemporary Economic Policy, Western Economic Association International, vol. 13(3), pages 110-130, July.
    • Handle: RePEc:bla:coecpo:v:13:y:1995:i:3:p:110-130
    DOI: 10.1111/j.1465-7287.1995.tb00727.x
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    3. Huh, Chan G. & Lansing, Kevin J., 2000. "Expectations, credibility, and disinflation in a small macroeconomic model," Journal of Economics and Business, Elsevier, vol. 52(1-2), pages 51-86.
    4. Matteo Deleidi & Enrico Sergio Levrero, 2021. "Monetary policy and long‐term interest rates: Evidence from the U.S. economy," Metroeconomica, Wiley Blackwell, vol. 72(1), pages 121-147, February.
    5. Biswajit Maitra, 2017. "Monetary and fiscal factors in nominal interest rate variations in Sri Lanka under a deregulated regime," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-17, December.
    6. Chan Guk Huh & Kevin J. Lansing, 1998. "Federal Reserve credibility and inflation scares," Economic Review, Federal Reserve Bank of San Francisco, pages 3-16.
    7. Jaroslav Brada & Karel Brůna, 2004. "Analýza citlivosti referenčních úrokových sazeb PRIBOR na změny repo sazby České národní banky [An analysis of PRIBOR interest rates sensitivity to changes in Czech national bank repo rate]," Politická ekonomie, Prague University of Economics and Business, vol. 2004(5), pages 601-621.
    8. Shu Wu, 2008. "Monetary Policy And Long‐Term Interest Rates," Contemporary Economic Policy, Western Economic Association International, vol. 26(3), pages 398-408, July.
    9. Yash P. Mehra, 1996. "Monetary policy and long-term interest rates," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 27-49.
    10. Levrero, Enrico Sergio & Deleidi, Matteo, 2019. "The causal relationship between short- and long-term interest rates: an empirical assessment of the United States," MPRA Paper 93608, University Library of Munich, Germany.
    11. Berument, Hakan & Froyen, Richard T., 2006. "Monetary policy and long-term US interest rates," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 737-751, December.
    12. Karel Brůna, 2007. "Měnová politika, změny trendové inflace a nestabilita úrokových relací: analýza dynamiky dlouhodobých úrokových sazeb v kontextu změn repo sazby české národní banky [Monetary policy, trend inflatio," Politická ekonomie, Prague University of Economics and Business, vol. 2007(1), pages 3-22.

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