Description
The determinants of yield curve dynamics have been thoroughly discussed in finance models. Alternatively, little can also be said in regards to the macroeconomic factors in the back of the movements of short- and long-term interest rates in addition to the risk compensation demanded by financial investors. By taking on a macro-finance standpoint, the book’s approach explicitly acknowledges the close feedback between monetary policy, the macroeconomy and financial conditions. Both theoretical and empirical models are applied as a way to get a profound figuring out of the interlinkages between economic activity, the conduct of monetary policy and the underlying macroeconomic factors of bond price movements. Additionally, the book identifies a broad risk-taking channel of monetary transmission which allows a reassessment of the role of financial constraints; it enables policy makers to develop new guidelines for monetary policy and for financial supervision of how to deal with evolving financial imbalances.