Economics, Econometrics and Finance
8 years ago

New Study Reveals Nonlinear Interest Rates Impact Market Dynamics

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A Flexible Non Linear Model to Test the Expectation Hypothesis of Interest Rates
Jean‐Michel Sahut, Mehdi Mili

Paper Summary

The article tests how interest rates behave using a new flexible method, instead of the usual linear one. They found that interest rates don't follow a straight line pattern, but have a more complex, nonlinear relationship. This means that understanding this nonlinearity can help explain why interest rates change and how they affect the market.

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