Canadian Interest Rates Predicted with Unbiased Accuracy, Impacting Economic Stability
The study looked at how interest rates in Canada behave over the long term. They found that the relationship between short-term and long-term rates is important, with the term spread being a good predictor of future short-term rate changes. By using a specific model, they were able to accurately predict changes in long-term rates. The results suggest that long-term interest rates in Canada are influenced by rational expectations about future short-term rates.