Economics, Econometrics and Finance
4 years ago

Portugal's Interest Rate Predictions Fail to Forecast Future Longer Rates.

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MPRA Paper
The Expectations Hypothesis of the Term Structure: Some Empirical Evidence for Portugal
Artur C. Silva Lopes, Olga Susana M. Monteiro

Paper Summary

The article tested a theory about interest rates in Portugal. The results show that the theory only partly holds true for long-term rates. Short-term rates can be predicted, but the difference between long and short rates doesn't help predict long-term rates. This challenges the idea that interest rate spreads can forecast future rates accurately.

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