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Interest Rates and Output in the Long Run

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  • Yunus AKSOY
  • Miguel LEON-LEDESMA

Abstract

In this paper we argue that both statistics and economic theory-based evidence largely indicate the absence of long run relationships between the real output and the most relevant monetary indicator for the U.K. and the U.S, short term interest rates. These findings are not only a full sample result, but also valid in most of the sub-samples throughout the second half of the 20th century and are robust to the inclusion of possible omitted real variables. JEL Classification: E3, E4, E5
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  • Yunus AKSOY & Miguel LEON-LEDESMA, 2010. "Interest Rates and Output in the Long Run," EcoMod2004 330600006, EcoMod.
    • Handle: RePEc:ekd:003306:330600006
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    Cited by:

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    2. Faria, João Ricardo & Mollick, André Varella & Sachsida, Adolfo & Wang, Le, 2012. "Do central banks affect Tobin's q?," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 1-10.
    3. Mallick, Sushanta K. & Sousa, Ricardo M., 2013. "The real effects of financial stress in the Eurozone," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 1-17.
    4. Bharat Chadha, 2007. "Impact of U.S. Federal Interest Rate and Movement of MSCI on Indian Capital Markets," Working Papers id:1024, eSocialSciences.
    5. Aviral Kumar Tiwari & Olaolu Richard Olayeni & Reza Sherafatian-Jahromi & Olofin Sodik Adejonwo, 2019. "Output Gap, Money Growth and Interest Rate in Japan: Evidence from Wavelet Analysis," Arthaniti: Journal of Economic Theory and Practice, , vol. 18(2), pages 171-184, December.
    6. International Monetary Fund, 2005. "Monetary Policy and Corporate Behavior in India," IMF Working Papers 2005/025, International Monetary Fund.
    7. Hrushikesh Mallick & Shashi Agarwal, 2007. "Impact Of Real Interest Rates On Real Output Growth In India: A Long-Run Analysis In A Liberalized Financial Regime," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 52(02), pages 215-231.
    8. Andre V. Mollick & Joao R. Faria, 2010. "Capital and labor in thelong-run: evidence fromTobin's q for the US," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 11-14, January.
    9. 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.
    10. Biswajit Maitra, 2018. "Determinants of Nominal Interest Rates in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 265-288, March.

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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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