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FINANCIAL MARKETS AND MONETARY POLICY - Essay Example
Author : windlermodesto
Finance & Accounting
Pages 8 (2008 words)
FINANCIAL mARKETS AND mONETARY THEORY (Author’s name) (Institutional Affiliation) Key words: Monetary Policy, Financial Market Term Structure of Interest Rates The interest rates’ term structure and economy are closely related. Conversely, the anticipations of real activity and future inflation can be crucial in determining the yield curve…
Other research has offered a concrete evidence favoring instability in the yield curve of the United States. The evidence is referenced with a rising theory on the side of macroeconomic where the inflation dynamic and real activity was characterized by significant period variation in various industrialized economies. The function of this paper double folds. First, the paper assesses the extent of period variation in the changes of some yield curve and macroeconomic variables. Secondly, the paper investigates if the term structure analysis can shed new dimensions of the performance of UK macroeconomic of the last five years. It is emphasized that various present studies have analyzed the UK macro economy dynamics and its term structure in situ. There is also a systematic investigation on the evolution of the connection between the yield curve and the economy over time. The paper specifies the relationship between finance and macro like in Nelson-Siegel model UK yield curve from 2008-2012 Financial Instrument for the Yield Curves Gilt-edged securities Normal gilt is a sure way by the nation to make payments of the guilt. A fixed cash payment is made semi-annually until a maturity date is attained. At maturity, the holder receives the terminal coupon and the principal. ...