The Behaviour of Nominal Interest Rates in the United Kingdom, 1961-1973

In November 1973 the rate of interest on UK Treasury bills was 12.83 per cent, which was then the highest recorded rate this century. Other interest rates on similar types of assets were also at historically very high levels. But although it is clearly important to understand why such high and undesirable rates have occurred, there are in fact very few empirical studies into what determines UK interest rates. (One such study is Ball, 1965.) Accordingly, in this paper we present and test, using UK data, a number of theories put forward to explain nominal interest rate behaviour. The paper is organized as follows. In Sections I and II we present and test alternative theories of interest rate behaviour, and in Section III we discuss the policy implications of these tests

Econometrics · Economics · Interest rate · International Fisher effect · Monetary economics · Nominal interest rate · Political science · Real interest rate · Treasury · Economic Growth and Productivity · German Economic Analysis & Policies · Law · Monetary Policy and Economic Impact

• A Theoretical Framework for Monetary Analysis

  Milton Friedman•Journal of Political Economy•1970

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