Monetary policy and long-term real rates

@article{Hanson2015MonetaryPA,
  title={Monetary policy and long-term real rates},
  author={S. Hanson and J. Stein},
  journal={Journal of Financial Economics},
  year={2015},
  volume={115},
  pages={429-448}
}
Changes in monetary policy have surprisingly strong effects on forward real rates in the distant future. A 100 basis point increase in the two-year nominal yield on a Federal Open Markets Committee announcement day is associated with a 42 basis point increase in the ten-year forward real rate. This finding is at odds with standard macro-models based on sticky nominal prices, which imply that monetary policy cannot move real rates over a horizon longer than that over which all prices in the… Expand

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