Does budget deficit affect short and long term interest rates differently?

2014 ◽  
Vol 8 (4) ◽  
pp. 399
Author(s):  
Philip Ifeakachukwu Nwosa ◽  
Catherine Kedei Ibas
Keyword(s):  
Interest Rates ◽  
Budget Deficit ◽  
Short And Long Term

Greenspan's Conundrum and Bernanke's Nightmare

2017 ◽  
pp. 1-23
Author(s):  
Francis E. Warnock
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
International Finance ◽  
Budget Deficit ◽  
Global Financial Crisis ◽  
Major Step ◽  
Treasury Bonds ◽  
The Global Financial Crisis ◽  
The U.S

At what point in the tepid recovery from the global financial crisis should the Fed take a major step in normalizing U.S. monetary policy by greatly reducing its holdings of U.S. Treasury bonds? Federal Reserve Board Chairman Ben Bernanke faced this question in Spring 2012, even as he was concerned that the U.S. economy was on weaker footing than many believed. Suitable for both core and elective MBA courses in global financial markets and international finance, this case examines the risks associated with a policy some would consider monetizing the budget deficit. Students consider the factors behind the current and prospective levels of U.S. long-term interest rates from Bernanke's perspective.

The Link between German Short- and Long-Term Interest Rates. Some Evidence against a Term Structure Oriented Monetary Policy / Der Zusammenhang zwischen kurz- und langfristigen Zinssätzen in Deutschland. Empirische Evidenz gegen eine zinsstrukturorientierte Geldpolitik

1998 ◽  
Vol 217 (2) ◽  
Author(s):  
Uwe Hassler ◽  
Dieter Nautz
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Term Structure ◽  
Monetary Union ◽  
Stable Relationship ◽  
Monetary Targeting ◽  
Main Indicator ◽  
Short And Long Term

SummaryCritics of the Bundesbank's monetary policy recently suggested the abandonment of monetary targeting in favour of the term structure of interest rates as the main indicator of central bank policy. However, a term structure oriented policy requires a reliable link between short- and long-term interest rates. Our analysis clearly suggests that there is no stable relationship between German short- and long-term interest rates, in particular not after the German monetary union. Consequently, the empirical results of this paper indicate that this policy has not much chance of success.

Optimal Term Structure in a Monetary Economy with Incomplete Markets

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Matthew Hoelle
Keyword(s):  
Interest Rates ◽  
Term Structure ◽  
Necessary Conditions ◽  
Policy Rules ◽  
Real Effects ◽  
Monetary Economy ◽  
Short And Long Term ◽  
Dynamic Policy ◽  
Recursive Representation

AbstractIn a stochastic economy, the rebalancing of short and long term government debt positions can have real effects when markets are incomplete. This paper analyzes both stationary and dynamic policy rules for the term structure of interest rates. After proving the existence of a recursive representation of equilibrium, necessary conditions for Pareto efficiency are characterized. The necessary conditions are equivalent for both stationary and dynamic policy rules.

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