Economics, Econometrics and Finance
3 years ago

Chile's Long-Term Interest Rates Driven by US Term Premium and Inflation.

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SSRN Electronic Journal
Nominal Term Structure and Term Premia: Evidence From Chile
Luis Ceballos, Alberto Naudon, Damián Romero

Paper Summary

The nominal interest rates in Chile have been decreasing since 2003, similar to other countries. By using a special model, researchers found that most of this drop is due to the term premium, not expected short-term rates. The term premium is influenced by the US term premium and domestic inflation uncertainty.

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