Monetary Policy and the Real Interest Rate: Some U.K. Evidence

Ronald MacDonald and Thomas S Torrance

Scottish Journal of Political Economy, 1988, vol. 35, issue 4, 361-71

Abstract: This paper examines the effects on ten- and twenty-year real U.K. interest rates of anticipated and unanticipated monetary overshoots for the period 1982.11 to 1986.10 (part of the period of the U.K.'s recent experience of monetary targeting), and it demonstrates, inter alia, that, on the day of monetary announcements, unanticipated surprises have a significantly positive effect. The novel features of this analysis are the use of the market-determined real redemption yield on index-linked U.K. government bonds to constitute the real interest rate series and the use of survey data to generate the expectational series. Copyright 1988 by Scottish Economic Society.

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:bla:scotjp:v:35:y:1988:i:4:p:361-71

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Scottish Journal of Political Economy is currently edited by Tim Barmby, Andrew Hughes-Hallett and Campbell Leith

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