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Record W2338198739 · doi:10.14288/1.0093988

Determinants of the long term interest rate in Canada

2010· article· en· W2338198739 on OpenAlexaboutno aff
Robert Lawrence Mouat

Bibliographic record

VenuecIRcle (University of British Columbia) · 2010
Typearticle
Languageen
FieldEconomics, Econometrics and Finance
TopicMonetary Policy and Economic Impact
Canadian institutionsnot available
Fundersnot available
KeywordsTerm (time)EconomicsActuarial scienceBusiness

Abstract

fetched live from OpenAlex

The purpose of this thesis was to develop a model that would demonstrate whether the government of Canada can effect an independent, or partially independent long-term interest rate policy with respect to the United States. The theoretical analysis of the economics resulted in four distinct equations for long-term interest rate determination; two for each of a closed economy model and an open economy model. The first equation for the closed model relates long-term interest rates to the rate of change of money supply, government expenditure and inflation. The second equation replaces government expenditure with unemployment, all other variables remaining the same. The variables of the two equations for the open economy were identical with those of the closed model. However, the open economy had values of the dependent variable which were the difference between the Canadian and U.S. long-term interest rates and values for the independent variables which were the differences between the Canadian and U.S. values of the rate of change of (for the first equation) money supply, inflation and government spending and (for the second equation) money supply, inflation and unemployment. Quarterly data were used over 92 periods from 1953 to 1975 inclusive with money supply and government spending being corrected for inflation. The long-term interest rate were government bond yields of ten years and over; the money supply were the sum of demand deposits plus currency held outside the banks; the government spending were total federal government expenditures and; the inflation rate were the gross national expenditure deflator. The equations were analysed using a routine which combined the Almon lag technique with the Cochrane-Oreutt method of regression. This allowed a selection of the lag length and the degree of the polynomial of the equation. In all of the equations in this paper the lag length is four periods and the degree of the polynomial is two. For the closed economy model the results showed the expected signs (money supply and unemployment negatively related, and inflation and government spending positively related), with few exceptions, the most notable being a negative government expenditure in the first lag period. The values of the coefficients indicated that inflation was the greatest influence on long-term interest rates, money supply and unemployment having a much smaller influence,and government expenditure having almost no affect over the four lag periods. The open economy model results showed the expected signs for the coefficients with a similar exception to the closed model. The value of the coefficients indicated that the inflation differential of the two countries was the greatest influence on the long-term interest rate differential with the money supply differential second, unemployment differential third and government expenditure differential having almost no explanatory power. Money supply differential had four significant lag coefficients indicating a divergence between monetary policy of Canada and the U.S. (whether intended or not). It appears from the results that although the U.S. largely controls Canada's long-term interest rate, Canada has the ability, whether it is used or not, to control part of its long-term interest rate. The differential of Canada and the U.S's rate of change of inflation, money supply and unemployment all influence the level of long-term interest rates. The control of these variables is the key to the government's control over the long-term interest rate.

Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.

How this classification was reachedexpand

Full frame machine prediction

Teacher imitation

Not calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.

metaresearch head score (Codex)0.001
metaresearch head score (Gemma)0.005
Version: metacan-v3-hybrid-931329e0061cValidation status: machine_predicted_unvalidated
Candidate categoriesnone
Consensus categoriesnone
DomainCandidate signal: none · Consensus signal: none
Study designCandidate signal: Observational · Consensus signal: Observational
GenreCandidate signal: Empirical · Consensus signal: Empirical
Teacher disagreement score0.038
Threshold uncertainty score0.276

Distilled classifier scores by category (both heads)

CategoryCodexGemma
Metaresearch0.0010.005
Meta-epidemiology (narrow)0.0000.000
Meta-epidemiology (broad)0.0000.000
Bibliometrics0.0010.001
Science and technology studies0.0010.001
Scholarly communication0.0030.001
Open science0.0010.001
Research integrity0.0000.001
Insufficient payload (model declined to judge)0.0050.000

Machine scores (provisional)

The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.

Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.

Opus teacher head0.025
GPT teacher head0.167
Teacher spread0.142 · how far apart the two teachers sit on this one work
Validation statusscore_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from it

Classification

machine, unvalidated

Machine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.

The models applied no category: nothing in the taxonomy fit this work.
Study designObservational
Domainnot available
GenreEmpirical

How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".

Quick stats

Citations0
Published2010
Admission routes1
Has abstractyes

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