Stock-Flow Adjustments and Interest Rates

Antonio Afonso and José Alves

No 2017/05, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: We assess the e ects of stock- ow adjustments (SFA) on short and long-term interest rates for 14 European countries between 1970 and 2015, in panel and SUR analysis. We conclude that an increase in SFA reduces long- and short-term interest rates, with higher reductions for short-term rates. Furthermore, the decreasing e ects of an increment in the stock- ow have reduced since the 2008-2009 nancial crisis. As expected, there is also an upward push on both interest rates from a rise in the debt ratio. Key Words : Stock- ow adjustment; Debt; Interest rates; SUR; Panel.

JEL-codes: C33 E43 H63 H83 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-mac
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