BNET Business Dictionary
Business Definition for: Nominal Interest Rate
- the interest rate as specified, without adjustment for compounding or inflation
Additional Resources
- Interpreting Money-Supply and Interest-Rate Shocks as Monetary-Policy Shocks
- In this paper two shocks are analysed using Canadian data: a money-supply shock ("M-shock") and an interest-rate shock ("R-shock"). A permanent increase in the nominal stock of M1 generates: a temporary fall in the interest rate, consistent with the liquidity effect; a temporary rise in real output; a permanent increase...
- White papers 1996-07-01
- Nominal Annual Interest Rate
- This tool tells you nominal annual interest rate, given the effective annual interest rate and the number of compounding periods.
- Tools & templates 2008-01-01
- Exchange Rate Policy and the Zero Bound on Nominal Interest Rates
- This paper studies the effectiveness of monetary policy in a severe recession and deflation when nominal interest rates are bounded at zero. It compares two alternative proposals for ameliorating the effect of the zero bound: an exchange-rate peg and price-level targeting. It conducts this quantitative comparison in an empirical macro...
- White papers 2004-03-01
- Overcoming the Zero Bound on Interest Rate Policy
- The paper proposes three options for overcoming the zero bound on interest rate policy: a carry tax on money, open market operations in long bonds, and monetary transfers. A variable carry tax on electronic bank reserves could enable a central bank to target negative nominal interest rates. A carry tax...
- White papers 2000-08-01
- The Long-Term Real Interest Rate For Social Security
- This paper considers the Social Security real interest rate, examining historical interest rates and estimates derived from Treasury inflation-indexed securities. The paper demonstrates that historical experience with nominal rates of return and realized inflation back through 1870 results in a long-term real interest rate just under 3 percent, although in...
- White papers 2005-03-30
- The Effect of Deficit-Reduction Laws on Real Interest Rates
- This paper uses news reports about two deficit-reduction laws of the past decade to identify days when expected fiscal policy clearly became more or less expansionary. The paper also proposes a technique for identifying whether the real interest rate increased or decreased on those days, based on changes in the...
- White papers 1996-01-10
- Effective Annual Interest Rate
- This tool tells you effective annual interest rate, given the nominal annual interest rate and the number of compounding periods.
- Tools & templates 2008-01-01
- Building Down the U.S. Consumer Society
- By now Americans hardly need reminding that, in the aggregate, they bought too much stuff over the last 10 years, and that it was unwise to rely so much on borrowed money. Economists are starting to reckon what it's going to cost to unwind it all and get the U.S....
- Blog posts 2009-05-27
- The Role of Interest Rates in Federal Reserve Policymaking
- Most central banks, including the U.S. Federal Reserve System, implement their monetary policy by setting interest rates. This paper reviews the major changes that have taken place along the way from the Federal Reserve's interest rate-based policy structure of the 1960s to the interest rate-based structure in place today, and...
- White papers 2000-12-13
- Rate Risk Fears Lead to New Corporate Bond Funds
- LONDON (Reuters) - In the midst of this year's once-in-a-lifetime rally in corporate bonds, some investors already see the specter that rising interest rates in the future could destroy much of their gains.A few are even starting to protect themselves, while the risk is still months away and the price...
- News items 2009-10-30
- Changing Monetary Policy Rules, Learning, and Real Exchange Rate Dynamics
- When central banks set nominal interest rates according to an interest rate reaction function, such as the Taylor rule, and the exchange rate is priced by uncovered interest parity, the real exchange rate is determined by expected inflation differentials and output gap differentials. This paper examines the implications of these...
- White papers 2005-01-01
- Why the Second Half Looks More Solid Every Day
- Inflation targeting a framework for monetary policy that commits the central bank to achieving low inflation has enjoyed considerable success among industrial countries in helping to maintain price stability. The article shows that Of course, the stock market and the economy are also benefiting from the recently enacted tax-cut package....
- White papers
- Forecasting Output and Inflation: The Role of Asset Prices
- Because asset prices are forward-looking, they constitute a class of potentially useful predictors of inflation and output growth. The premise that interest rates and asset prices contain useful information about future economic developments embodies foundational concepts of macroeconomics: Irving Fisher's theory that the nominal interest rate is the real rate...
- White papers 2003-09-01
- Exchange Rate Regimes And Financial-Market Imperfections
- This paper investigates the design of an exchange rate policy for an economy where the domestic capital market is segmented from the global financial market, producers rely on credit to finance working capital needs, and the labor market is characterized by nominal contracts. We show that the choice of an...
- White papers 2000-06-05
- Optimal Simple and Implementable Monetary and Fiscal Rules
- The goal of this paper is to compute optimal monetary and fiscal policy rules in a real business cycle model augmented with sticky prices, a demand for money, taxation, and stochastic government consumption. It considers simple policy rules whereby the nominal interest rate is set as a function of output...
- White papers 2004-01-01
- Habit Formation and the Persistence of Monetary Shocks
- This paper studies the persistent effects of monetary shocks on output. Previous empirical literature documents this persistence, but standard general-equilibrium models with sticky prices fail to generate output responses beyond the duration of nominal contracts. The paper constructs and estimates a general-equilibrium model with price rigidities, habit formation, and costly...
- White papers 2002-10-01
- US interest rates rise is 'a foregone conclusion'.
- By Allister Heath, The Business, London Knight Ridder/Tribune Business News Nov. 7--American consumers will be hit by their fourth hike in interest rates since the collapse of the dot.com bubble on Wednesday -- a move that will take nominal rates to the...
- Research articles 2004-11-07
- Price Level Determinacy and Monetary Policy under a Balanced Budget Requirement
- This paper analyzes the implications of a balanced budget fiscal policy rule for the determinacy of the price level in a cash-in-advance economy under three alternative monetary policy regimes. It shows that, in such stylized models with flexible prices and a period-by-period balanced budget requirement, the price level is determinate...
- White papers 1997-01-04
- A stable money demand: looking for the right monetary aggregate.
- Introduction and summary The stability of a money demand relationship has been a major concern in monetary economics for the last 50 years. It is conventional to call the relationship between real money, a nominal interest rate, and a measure of economic activity...
- Research articles 2005-03-22
- Optimal Monetary Policy In A Small Open Economy With Habit Formation And Nominal Rigidities
- Introducing habit formation into an open economy macroeconomic model with price stickiness, it examines the characteristics of an optimal monetary policy. It finds that, first; the optimal policy rule entails interest rate smoothing and responds to the lagged values. Second, habit formation enriches the dynamics of the economy with a...
- White papers 2003-01-01
