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Some Lessons from the Yield Curve

Some Lessons from the Yield Curve Abstract This paper reviews the literature on the relation between short- and long-term interest rates. It summarizes the mixed evidence on the expectation hypothesis of the term structure: when long rates are high relative to short rates, short rates tend to rise as implied by the expectations hypothesis, but long rates tend to fall, which is contrary to the expectations hypothesis. The paper discusses the response of the U.S. bond market to shifts in monetary policy in the spring of 1994 and reviews the debate over the optimal maturity structure of the U.S. government debt. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Perspectives American Economic Association

Some Lessons from the Yield Curve

Campbell, John Y
Journal of Economic Perspectives , Volume 9 (3) – Aug 1, 1995
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Publisher
American Economic Association
Copyright
Copyright © 1995 by the American Economic Association
Subject
Articles
ISSN
0895-3309
DOI
10.1257/jep.9.3.129
Publisher site
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Abstract

Abstract This paper reviews the literature on the relation between short- and long-term interest rates. It summarizes the mixed evidence on the expectation hypothesis of the term structure: when long rates are high relative to short rates, short rates tend to rise as implied by the expectations hypothesis, but long rates tend to fall, which is contrary to the expectations hypothesis. The paper discusses the response of the U.S. bond market to shifts in monetary policy in the spring of 1994 and reviews the debate over the optimal maturity structure of the U.S. government debt.

Journal

Journal of Economic Perspectives – American Economic Association

Published: Aug 1, 1995

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