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Stock-Flow Adjustments and Interest Rates

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Listed:
  • António Afonso
  • José Alves

Abstract

We assess the e ects of stock- ow adjustments (SFA) on short and long-term interest rates for 14 European countries between 1970 and 2015, in panel and SUR analysis. We conclude that an increase in SFA reduces long- and short-term interest rates, with higher reductions for short-term rates. Furthermore, the decreasing e ects of an increment in the stock- ow have reduced since the 2008-2009 nancial crisis. As expected, there is also an upward push on both interest rates from a rise in the debt ratio. Key Words : Stock- ow adjustment; Debt; Interest rates; SUR; Panel.

Suggested Citation

  • António Afonso & José Alves, 2017. "Stock-Flow Adjustments and Interest Rates," Working Papers Department of Economics 2017/05, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp052017
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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