Term structure evidence on interest rate

By Glenn Rudebusch, Federal Reserve Bank of San Francisco

Email Glenn.Rudebusch@sf.frb.org

Abstract: Numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate. The conventional wisdom is that this gradual adjustment reflects a policy inertia or interest rate smoothing behaviour by central banks. However, such quarterly monetary policy inertia would imply a large amount of

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