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The Transmission of Monetary Policy: The Relationship Between Overnight Cash Rates *
Author(s) -
ELLIOTT GRAHAM,
BEWLEY RONALD
Publication year - 1994
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1994.tb01821.x
Subject(s) - float (project management) , differential (mechanical device) , cash , economics , monetary economics , liberian dollar , interest rate , monetary policy , macroeconomics , finance , engineering , management , aerospace engineering
This paper utilizes daily data from the period of the ‘clean’ float of the Australian dollar to consider the relationship between two key Australian short‐term interest rates: the official and the unofficial overnight cash rates. There is a stable long‐run differential of I per cent between the two rates and a short‐run dynamic policy reaction function is found which indicates that the official rate reacted to the size of the past interest rate differential.