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Monetary Policy and Short‐term Interest Rates: An Efficient Markets‐Rational Expectations Approach
Author(s) -
MISHKIN FREDERIC S.
Publication year - 1982
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1982.tb01095.x
Subject(s) - rational expectations , economics , interest rate , proposition , term (time) , monetary policy , interpretation (philosophy) , empirical research , money market , econometrics , monetary economics , computer science , mathematics , philosophy , statistics , physics , epistemology , quantum mechanics , programming language
This paper is an application of efficient markets‐rationael xpectations theory to analyze empirically the relationship of money supply growth and short‐term interest rates, a hotly debated issue in the literature. This approach has the advantage over earlier research on this subject in that it imposes a theoretical structure that allows easier interpretation of the empirical results as well as more powerful statistical tests. The empirical results uniformly do not support the proposition that increases in money growth are correlated with declines in short rates.