What is it about?
The short-term interest rate is the key driver of the long-term interest rate. Core inflation and growth also influence the long-term interest rate. A rise in the fiscal balance ratio slightly lowers the long-term interest rate. The empirical findings reinforce Keynes’s insights on interest rates.
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Why is it important?
Explain the dynamics of interest rates in the US from a Keynesian perspective
Read the Original
This page is a summary of: An inquiry concerning long-term U.S. interest rates using monthly data, Applied Economics, November 2019, Taylor & Francis, DOI: 10.1080/00036846.2019.1693696.
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