Skip to content

Roderick Givens


Bio, Research, Abstract

Top Navigation

Main Navigation

  • EWU Home
  • Academics at Eastern
  • Ronald E. McNair Post Baccalaureate Achievement Program
  • Past and Present Participants
  • 1997 Research Interns
  • Roderick Givens
  • Main Content

    1997 Research

    Abstract: Inflation and Real Interest Rates

    Mentor: Dr. David Eagle, Business

    On January 29th, 1997, the United States began issuing Treasury inflation-price securities. Great Britain has issued inflation indexed guilts since 1981. This paper investigates the contracted real rates from Great Britain's inflation-indexed guilts. The ex-ante approach to real interest rates is different than derived real interest rates. Historically, real interest rates have been measured ex-post or looking into the past. The purpose of this paper is to examine the different ways to calculate real interest rates. Historically, literature supports a negative correlation between inflation and real interest rates. However, we find the contracted ex-ante real interest rates is positively correlated with inflation.
    Research on contracted real interest rates has mostly been limited to Israel and Great Britain. Countries similar to Israel issue inflation-index securities however, the hyper-inflationary conditions do not make a good prototype for comparing to industrialize nations. This paper assumes the monetary policies are similar between Great Britain and the United States. This paper investigates why inflation-index bonds bear a contracted real interest rate different from derived real interest rates. By studying the components of the real interest rates of inflation-index securities we can identify the reason.

    Contact Information

    Eastern Washington University
    526 5th Street
    Cheney, WA 99004

    phone: 509.359.6200 (campus operator)

    Footer Navigation

    Text Only Options

    View the original version of this page.