Summary of – Explaining rotation of linkages between monetary policy and long-term interest rates
Document Type
Article
Abstract
Understanding the linkages between monetary policy surprises and long-term interest rates is of immense interest to policymakers and researchers worldwide.
Research Goals and Hypotheses
In this paper, the authors investigate this relationship for a large sample of 29 economies and attempt to unravel the possible reasons for rotated linkages between these two variables over a long time period, 1979–2019.
Methodological Approach
We examine this phenomenon using financial crisis and positive inflation deviations, which may cause such exogenous shifts, and find both to be responsible for rotated linkages.
Results and Discoveries
we find that the linkages get rotated the most during the systemic crises, followed by the banking crises and currency crises, in that order. In terms of policy prescriptions, we confirm that central banks can ensure effective monetary transmission to long-term interest rates by having a robust monetary policy framework which encompasses the three pillars of independence and accountability, policy and operational strategy, and communications.
Citation to the base paper:
Rohit, A., & Bhat, R. S. (2022). Explaining rotated linkages between monetary policy and long-term interest rates. Applied Economics, 55(25), 2835–2846. https://doi.org/10.1080/00036846.2022.2107164
Publication Date
2022
Recommended Citation
Rohit, A., & Bhat, R. S. (2022). Explaining rotated linkages between monetary policy and long-term interest rates. Applied Economics, 55(25), 2835–2846. https://doi.org/10.1080/00036846.2022.2107164
Publication Date
2022
Recommended Citation
Rohit, Abhishek and S. Bhat, Raghavendra, "Summary of – Explaining rotation of linkages between monetary policy and long-term interest rates" (2022). Open Access archive. 9378.
https://impressions.manipal.edu/open-access-archive/9378
