Money Surprises and Short-Term Interest Rates: Reconciling Contradictoryfindings

13 Pages Posted: 19 Jun 2004 Last revised: 19 Sep 2022

See all articles by John H. Makin

John H. Makin

American Enterprise Institute (AEI); National Bureau of Economic Research (NBER)

Date Written: September 1982

Abstract

This note attempts to reconcile contradictory findings regarding the impact of money surprises on short term interest rates. Expectations effects regarding anticipated monetary policy and anticipated inflation suggest a positive relationship. Liquidity and output effects of monetary surprises suggest a negative relationship. It is shown that intra-day data and end-of-period data will capture expectations effects while period average data will capture liquidity/output effects. Seemingly contradictory results are reconciled by differences in dependent variables employed by various authors.

Suggested Citation

Makin, John, Money Surprises and Short-Term Interest Rates: Reconciling Contradictoryfindings (September 1982). NBER Working Paper No. w0993, Available at SSRN: https://ssrn.com/abstract=303486

John Makin (Contact Author)

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National Bureau of Economic Research (NBER)

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