43
Views
1
CrossRef citations to date
0
Altmetric
Original Articles

Do interest rates predict real economic activity?

&
Pages 589-595 | Published online: 06 Oct 2010
 

Abstract

This paper employs a structural VAR procedure to test some fundamental propositions of the business cycle using a developing economy framework. The focus of the paper is on KBC, MBC and RBC theories as well as on the alternative view, which has been propagated mainly by Sims. The empirical analysis intends to report extensive evidence on the dynamics between money, output, interest rates and prices. The results suggest that the effects of system shocks conform to the alternative view supporting the central role of interest rates. Interest rate shocks explain a majority of the variation in money, output and prices. The results are generally robust across different orderings, alternative interest rate measures and various sample periods.

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.