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Monetary policy and long-term interest rates

Empirical relations between the federal funds rate and long-term interest rates are analyzed by employing the vector error correction modeling and cointegration techniques. The findings reveal a cointegration relation and a unidirectional causality from the federal funds rate to the long-term intere...

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Published in:	Journal of post Keynesian economics 2005-04, Vol.27 (3), p.533-539
Main Author:	ATESOGLU, H. SONMEZ
Format:	Article
Language:	English
Subjects:	Causality Central banks cointegration Cointegration analysis Corporate bonds Economic theory Economics Federal funding Federal funds rate Government relations Interest rates Long term long-term interest rates Monetary economics Monetary policy Monetary policy transmission mechanisms Money supply Post Keynesian economics Post-Keynesianism Studies Treasury notes U.S.A
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description	Empirical relations between the federal funds rate and long-term interest rates are analyzed by employing the vector error correction modeling and cointegration techniques. The findings reveal a cointegration relation and a unidirectional causality from the federal funds rate to the long-term interest rates and are supportive of the horizontalist rather than the structuralist view of the money supply endogeneity. Findings also reveal that changes in the federal funds rate do not have much of an effect on the long-term interest rates in the short run. These results raise doubts concerning the effectiveness of monetary policy in the short run.
doi_str_mv	10.1080/01603477.2005.11051451
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source	International Bibliography of the Social Sciences (IBSS); Taylor & Francis; EBSCOhost Econlit with Full Text; BSC - Ebsco (Business Source Ultimate); JSTOR
subjects	Causality Central banks cointegration Cointegration analysis Corporate bonds Economic theory Economics Federal funding Federal funds rate Government relations Interest rates Long term long-term interest rates Monetary economics Monetary policy Monetary policy transmission mechanisms Money supply Post Keynesian economics Post-Keynesianism Studies Treasury notes U.S.A
title	Monetary policy and long-term interest rates
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