Monetary Policy and Long-Term Interest Rates: An Efficient Markets Approach

25 Pages Posted: 19 Jun 2004

See all articles by Frederic S. Mishkin

Frederic S. Mishkin

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: July 1980

Abstract

This paper is an application of efficient markets theory to analyze empirically the relationship of money supply growth and long-term interest rates. This approach has the advantage over earlier research on this subject in that it imposes a theoretical structure on this relationship that allows easier interpretation of the empirical results as well as more powerful statistical tests. In the interest of ascertaining the robustness of the results, many different empirical tests are carried out in this paper, and they uniformly do not support the proposition that increases in the money supply are correlated with declines in long rates.

Suggested Citation

Mishkin, Frederic S., Monetary Policy and Long-Term Interest Rates: An Efficient Markets Approach (July 1980). NBER Working Paper No. w0517, Available at SSRN: https://ssrn.com/abstract=263398

Frederic S. Mishkin (Contact Author)

Columbia Business School - Finance and Economics ( email )

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