Political Regime Change and the Real Interest Rate

Tony Caporale () and Kevin Grier

Journal of Money, Credit and Banking, 2000, vol. 32, issue 3, 320-34

Abstract: The effect of changes in policy regimes on real interest rates has important implications for financial and economic theory. There is little current evidence that policy regime changes have any impact on the level of real interest rates. We use large political changes as our measure of policy regime changes. Changes in presidential administration are more significantly correlated with real rate changes than are changes in the Federal Reserve Chair or the mean shift points identified by Garcia and Perron (1996) using time series methods. We also show that change of party control of congress is a significant factor explaining real rates. We argue that theoretical models built on the assumptions of constant or policy invariant real interest rates are at variance with the empirical evidence.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (64)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:32:y:2000:i:3:p:320-34

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().