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Global Interest Rate Environment with Emphasis on Quantitative Easing Implications

Received: 2 March 2017     Accepted: 24 March 2017     Published: 1 June 2017
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Abstract

Constructing global real interest rates at short and long maturities and reviews their evolution since 1980. It also traces the evolution of the cost of capital, It then analyzed key factors that could explained the observed pattern, shift in savings, changes in monetary and fiscal policy, shift in investment demand, changes in relative prices of investment, monetary policy and portfolio shifts between bonds and equity. It closes by considering how the main factors behind the decline in real interest rates might play out in the medium term. Real interest rates and the cost of capital are likely to rise moderately in the medium term from current level. Part of the reason is cyclical, the extremely low real interest rates of recent years reflects large negative output gaps in advanced economies. Indeed, the real interest rates might have declined even further in the absence of the zero lower bound on nominal interest rate.

Published in American Journal of BioScience (Volume 5, Issue 4)
DOI 10.11648/j.ajbio.20170504.11
Page(s) 59-63
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Real, Interest, Nominal, Monetary, Fiscal

References
[1] Bernanke, B., (2012).The Federal Reserve’s quantitative easing or large scale assets purchase program. www.thedaily economist.com/2012/_09_01 archive.html. Retrieved: October 28th 2016.
[2] Capistran, C., & Timmermann, A. (2009). Disagreement and biases in inflation expectation. Journal of Money, Credit and banking, (41)366-396.
[3] Cerra,V., & Saxena, S. C. (2008).Growth dynamics: The myth of economic recovery, American Economic Review. 98(1)439-57.
[4] Dovern, J., Fritsch, U., & Slacalek, J. (2009). Disagreement among Forecaster in G7 countries, ECB workingpaper1082.
[5] Eggertsson, G. B., & Woodford, M. (2003). The zero bound on interest rates and optional monetary policy. Brooking Paper on Economic Activity. (1)139-211.
[6] Harlina, S. J., Intan, R. E., Nasruddin, F., & Emi, N. O. (2011). The economic growth and how effectiveness is the stock market. International Business Journal, 24(6)24-25.
[7] Lyonnet, V., & Werner, R. A. (2012). Lessons from the Bank of Ghana on quantitative easing and the accountability of the central bank in Japan. Working paper presented at the 15th annual meeting of the annual international conference on macroeconomic analysis and international finance.
[8] Reinharrt, C. M., & Rogoff, K. S., (2008). Is the U. S. subprime crisis so different? An international historical comparison. Americal Economic Review. 98 (2)339-44.
[9] Voutsinas, Y., & Werner, R. A.,(2016).Bank runs, deposit instruments and Liquidity. Journal of Political Economy,(2) 26-35.
[10] Zenith Bank (Ghana) Ltd. (2015a). Z-Business news, Monthly Bulletin, January (100), 2-3.
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  • APA Style

    Emmanuel Teitey. (2017). Global Interest Rate Environment with Emphasis on Quantitative Easing Implications. American Journal of BioScience, 5(4), 59-63. https://doi.org/10.11648/j.ajbio.20170504.11

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    Emmanuel Teitey. Global Interest Rate Environment with Emphasis on Quantitative Easing Implications. Am. J. BioScience 2017, 5(4), 59-63. doi: 10.11648/j.ajbio.20170504.11

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    AMA Style

    Emmanuel Teitey. Global Interest Rate Environment with Emphasis on Quantitative Easing Implications. Am J BioScience. 2017;5(4):59-63. doi: 10.11648/j.ajbio.20170504.11

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  • @article{10.11648/j.ajbio.20170504.11,
      author = {Emmanuel Teitey},
      title = {Global Interest Rate Environment with Emphasis on Quantitative Easing Implications},
      journal = {American Journal of BioScience},
      volume = {5},
      number = {4},
      pages = {59-63},
      doi = {10.11648/j.ajbio.20170504.11},
      url = {https://doi.org/10.11648/j.ajbio.20170504.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajbio.20170504.11},
      abstract = {Constructing global real interest rates at short and long maturities and reviews their evolution since 1980. It also traces the evolution of the cost of capital, It then analyzed key factors that could explained the observed pattern, shift in savings, changes in monetary and fiscal policy, shift in investment demand, changes in relative prices of investment, monetary policy and portfolio shifts between bonds and equity. It closes by considering how the main factors behind the decline in real interest rates might play out in the medium term. Real interest rates and the cost of capital are likely to rise moderately in the medium term from current level. Part of the reason is cyclical, the extremely low real interest rates of recent years reflects large negative output gaps in advanced economies. Indeed, the real interest rates might have declined even further in the absence of the zero lower bound on nominal interest rate.},
     year = {2017}
    }
    

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    AB  - Constructing global real interest rates at short and long maturities and reviews their evolution since 1980. It also traces the evolution of the cost of capital, It then analyzed key factors that could explained the observed pattern, shift in savings, changes in monetary and fiscal policy, shift in investment demand, changes in relative prices of investment, monetary policy and portfolio shifts between bonds and equity. It closes by considering how the main factors behind the decline in real interest rates might play out in the medium term. Real interest rates and the cost of capital are likely to rise moderately in the medium term from current level. Part of the reason is cyclical, the extremely low real interest rates of recent years reflects large negative output gaps in advanced economies. Indeed, the real interest rates might have declined even further in the absence of the zero lower bound on nominal interest rate.
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Author Information
  • Research Department, Noble International Business /Doctoral School, Accra, Ghana

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