The Macro-Finance View of the Term Structure of Interest Rates

Felix Geiger

Chapter Chapter 5 in The Yield Curve and Financial Risk Premia, 2011, pp 117-157 from Springer

Abstract: Abstract It is a widely accepted consensus that the operating instrument with which a central bank conducts monetary policy is the short-term interest rate. Typically, it sets its policy rate conditional on the macroeconomic environment for the purpose of achieving its final goals of price stability as well as output stability. Managing aggregate demand operates through various transmission channels where interest rate moves affect the whole set of asset prices, the net worth of balance sheet positions and the lending behavior of banks. An important feature in the traditional interest-rate channel is the emphasis on real rather than nominal interest rates and the role of long-term interest rates.

Keywords: Interest Rate; Monetary Policy; Central Bank; Term Structure; Yield Curve (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-642-21575-9_5

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DOI: 10.1007/978-3-642-21575-9_5

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