School of Economics

2004 Discussion Papers

School of Economics Discussion Paper 04/09
September 2004

Interest Rates and Output in the Long-run
Yunus Aksoy and Miguel León-Ledesma

School of Economics
University of Kent at Canterbury


In this paper we argue that both statistics and economic theory-based evidence largely indicate the absence of long run relationships between the real output and the most relevant monetary indicator for the U.K. and the U.S short term interest rates. These findings are not only a full sample result, but also valid in most of the subsamples throughout the second half of the 20th century.

JEL Classification: E3, E4, E5

Keywords: information value, long term relationship, cointegration, bounds tests

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