Monetary Policy with Flexible Exchange Rates and Forward Interest Rates as Indicators

Lars Svensson

No 4633, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the new situation with flexible exchange rates, monetary policy in Europe will have to rely more on indicators than previously under fixed rates. One of the potential indicators, the forward interest rate curve, can be used to indicate market expectations of the time-paths of future short interest rates, monetary policy, inflation rates and currency depreciation rates. The forward rate curve separates market expectations for the short, medium and long term more easily than the standard yield curve. Monetary policy in France, Germany, Great Britain, Sweden and the United States is interpreted with the help of forward rates.

JEL-codes: E50 F31 (search for similar items in EconPapers)
Date: 1994-01
Note: IFM ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published as Banque de France, Cahiers economiques et monetaires, ed. Jean-Marie Roux,vol. 43, no. 0396-4701, pp 305-332, (1994)

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Related works:
Working Paper: Monetary Policy with Flexible Exchange Rates and Forward Interest Rates as Indicators (1994)
Working Paper: Monetary Policy with Flexible Exchange Rates and Foreward Interest Rates as Indicators (1993)
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