IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Risk Effects Versus Monetary Effects in the Determination of Short-term Interest Rates

Listed author(s):
  • Malcolm L. Edey

    (Reserve Bank of Australia)

Registered author(s):

    Economic theory offers two distinct approaches to the modelling of interest rates. At the microeconomic level, interest rates are modelled as an outcome of intertemporal optimisation by investors, so that real interest rates are determined entirely by the real variables that characterise risk. At the macroeconomic level, short term behaviour of interest rates is usually thought of as being governed by the money demand function. This paper tests a model that encompasses both views, using data for four countries. The results suggest that risk factors are empirically insignificant in explaining interest rate behaviour.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp8708.

    in new window

    Date of creation: Oct 1987
    Handle: RePEc:rba:rbardp:rdp8708
    Contact details of provider: Postal:
    GPO Box 3947, Sydney NSW 2001

    Phone: 61-2-9551-8111
    Fax: 61-2-9551-8000
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:rba:rbardp:rdp8708. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paula Drew)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.