Abstract

This paper uses Japanese data to investigate the relationship between monetary policy and the yield curve. We find that the response of the yield curve depends in an important way on the maintained hypothesis about how monetary policy affects the economy. Under the liquidity effect maintained hypothesis monetary policy only has transient effects on the yield curve. Under the costly price adjustment maintained hypothesis, however, monetary policy has large and persistent effects on yields of all maturities.

Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call