Using the Term Structure of Interest Rates for Monetary Policy
18 Pages Posted: 21 Nov 2012
Date Written: 1998
The term structure of interest rates serves both as a vital link in the transmission of monetary policy and as an indicator of inflation expectations. The term structure is used here in a new application to address the 'policy in the pipeline problem.' Likewise, a peso-problem interpretation involving inflation scares can resolve some anomalies in the term structure data. Nevertheless, pitfalls still remain in using the term structure for tactical purposes.
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