Monetary regimes, the term structure and business cycles in Ireland, 1972-2018

Arbeitspapier

The ability of the term structure (specifically the term spread, or the difference between the long and short ends of the yield curve) to predict economic activity is empirically well-established for the US, but less so for small open economies. The literature emphasizes the role of monetary policy for this predictive ability. Between 1972-2018, Ireland experienced three monetary regimes: first, the Irish Pound was fixed to Sterling (1972-1979); second the Pound floated in a band when Ireland was a member of the EMS (1979-1998); and third, as a member of the euro area (1999-2018). Using dynamic probit models and monthly data, I show that the term spread only had predictive power during the second regime, the only one in which the Central Bank of Ireland had any discretion to set interest rates based on domestic conditions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: QUCEH Working Paper Series ; No. 2020-03

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Macroeconomics and Monetary Economics: General ; Interest Rates: Determination, Term Structure, and Effects ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Europe: 1913-
• Subject: Ireland ; term structure ; recessions ; monetary regimes

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stuart, Rebecca
• Event: Veröffentlichung
• (who): Queen's University Centre for Economic History (QUCEH)
• (where): Belfast
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/218817
• Last update: 10.03.2025, 11:44 AM CET