New method revolutionizes predicting interest rates for financial markets!
The article discusses different methods to estimate the yield curve, which shows how interest rates change over time. Researchers use models to predict these changes, with some models fitting the curve perfectly but losing smoothness. Nelson and Siegel curves provide a good overall fit, while cubic spline interpolation uses cubic polynomials to estimate the curve. There are two main approaches to fitting the curve: parametric and non-parametric.