Monetary Regimes, the Term Structure and Business Cycles in Ireland, 1972–2018

18 Pages Posted: 3 Sep 2020

Date Written: September 2020

Abstract

The literature emphasizes the role of monetary policy for the term structure's ability to predict business cycles. Between 1972 and 2018, Ireland experienced three monetary regimes: first, the Irish Pound was fixed to Sterling (1972–1979); second the Pound floated in a band when Ireland was a member of EMS (1979–1998); and third, as a member of the euro area (1999–2018). Using dynamic probit models and monthly data, I show that the term spread only had predictive power during the second regime, the only one in which the Central Bank of Ireland had discretion to set interest rates based on the domestic conditions.

Keywords: Ireland, monetary regimes, recessions, term structure

Suggested Citation

Stuart, Rebecca, Monetary Regimes, the Term Structure and Business Cycles in Ireland, 1972–2018 (September 2020). The Manchester School, Vol. 88, Issue 5, pp. 731-748, 2020, Available at SSRN: https://ssrn.com/abstract=3684628 or http://dx.doi.org/10.1111/manc.12322

Rebecca Stuart (Contact Author)

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
84
PlumX Metrics