Interest Rates, Money Supply Announcements, and Monetary Base Announcements

70 Pages Posted: 28 May 2004  

John P. Huizinga

University of Chicago - Booth School of Business

Leonardo Leiderman

Tel Aviv University - Eitan Berglas School of Economics; Bank of Israel

Date Written: September 1985

Abstract

This paper presents a new set of empirical regularities on the link between interest rates, money supply announcements and monetary base announcements. Among the main findings reported are: (i) unexpected increases in the announced monetary base have a significantly positive effect on interest rates during the period from October 1979 to October 1982; (ii) although unexpected money supply and monetary base announcements have the same impact on interest rates, they have different implications for the future behavior of the money supply and monetary base; (iii) the significant response of longer-term interest rates to unexpected monetary announcements is reflecting a response of current and expected future short-term rates -- i.e.term-structure premia are not altered by these announcements.

Suggested Citation

Huizinga, John P. and Leiderman, Leonardo, Interest Rates, Money Supply Announcements, and Monetary Base Announcements (September 1985). NBER Working Paper No. w1705. Available at SSRN: https://ssrn.com/abstract=338780

John Huizinga (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7272 (Phone)
773-702-2225 (Fax)

Leonardo Leiderman

Tel Aviv University - Eitan Berglas School of Economics

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

Bank of Israel

P.O. Box 780
Jerusalem, 91907
Israel

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