Asymmetric Impacts of Inflation on the US Bond Rates and FED’s Pre-Emptive Policy-Reference-Cited by-同舟云学术

Asymmetric Impacts of Inflation on the US Bond Rates and FED’s Pre-Emptive Policy

Published:2020-12-01 Issue:2 Volume:5 Page:143-157
ISSN:2451-2370
Container-title:Econometric Research in Finance
language:en
Short-container-title:

Author:

Göçer İsmet¹,Ongan Serdar²

Affiliation:

1. Department of Econometrics , Aydın Adnan Menderes University , Turkey

2. Department of Economics , St. Mary’s College of Maryland United States

Abstract

Abstract This study investigates the asymmetric impacts of changes in inflation rates on the US bond rates. This investigation is constructed on the Fisher Equation. To this end, the nonlinear ARDL model is applied. Empirical findings indicate that only the decreases (π− t ) in inflation rates affect bond rates. This asymmetric impact therefore shapes the FED’s monetary policy in terms of determining the bond rates at lower cost. When the inflation rate rises, the FED will know (in advance) that they do not need to increase the bond rates. This reminds us the FED’s former pre-emptive strike policy against inflation.

Publisher

Walter de Gruyter GmbH

Link

https://www.sciendo.com/pdf/10.2478/erfin-2020-0008

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