The Term Structure of Interest Rates in a Small Open Economy: A Stochastic Analysis
AbstractThis article employs a rational expectations IS-LM model with price adjustment to study the effect of domestic monetary and fiscal policy and world interest rate disturbances on the real and nominal small open economy term structure of interest rates. The impact of both temporary and permanent shocks are investigated. Notable results include the fact that monetary expansions lead to positive yield curves, while the implications of fiscal expansions and increases in the world interest rate depend crucially on the duration of the shock. Copyright Kluwer Academic Publishers 2000
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Bibliographic InfoArticle provided by Springer in its journal Open Economies Review.
Volume (Year): 11 (2000)
Issue (Month): 3 (July)
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Web page: http://www.springerlink.com/link.asp?id=100323
open economy; term structure;
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89-03, University of Washington, Department of Economics.
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