Modelling Target Areas for Short-Term Interest Rates

Cuadernos de Economía, Vol. 25, No. 45, 2006

32 Pages Posted: 13 Jul 2007

Abstract

This article presents a short-term interest rate monetary model; it generalises Junca and Rodríguez's interest rate formation model and captures the exogenous and endogenous factors determining monetary supply and short-term interest rate behaviour. Short-term interest rate rises with increased expectations of future inflation, external interest rate and future short-term interest-rate expectations. The model shows that a policy for controlling the amount of money could stabilise the short-term rate, as well as other interest rates.

Note: The downloadable document is in Spanish.

Keywords: interest rate, monetary policy, target area model

JEL Classification: E43, E50

Suggested Citation

Junca Rodriguez, Gustavo Adolfo, Modelling Target Areas for Short-Term Interest Rates. Cuadernos de Economía, Vol. 25, No. 45, 2006, Available at SSRN: https://ssrn.com/abstract=998650

Gustavo Adolfo Junca Rodriguez (Contact Author)

National University of Colombia ( email )

Carrera 30 45-03
Bogota, None
Colombia

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