NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Understanding Real Interest Rates

Frederic S. Mishkin

NBER Working Paper No. 2691 (Also Reprint No. r1204)
Issued in August 1988
NBER Program(s):   EFG   ME

This paper outlines an approach to measuring real interest rates and testing hypotheses on their behavior. It then describes what we know about real interest rates in the aggregate economy and provides estimates of real interest rates for the agricultural sector. The evidence presented in this paper indicates that real interest rates for the agricultural economy have been extremely high in the l98Ds and that their behavior seems to be linked to that found for real rates in the aggregate economy. What has been the source of these high real rates? The answer seems to be that it was a result of a concerted effort by the monetary authorities to disinflate the economy. However, the brunt of the Fed's disinflationary policy has fallen more heavily on the farm sector which has had to face far higher reel rates than the rest of the economy. Although breaking the back of inflation was certainly a worthy goal for the Fed, farmers have had to pay a heavy price. They have had to suffer for the sins of an economy that was excessively inflationary, which then had to be brought back into line with disinflationary policy.

download in pdf format
   (304 K)

download in djvu format
   (142 K)

email paper

This paper is available as PDF (304 K) or DjVu (142 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2691

Published: American Journal of Agricultural Economics, Vol. 70, No. 5, pp. 1064-1075,(December 1988).

Users who downloaded this paper also downloaded these:
Mishkin w0622 The Real Interest Rate: An Empirical Investigation
Barro and Sala-i-Martin w3317 World Real Interest Rates
Mishkin w1047 The Real Interest Rate: A Multi-Country Empirical Study
Mishkin w3632 Is the Fisher Effect for Real? A Reexamination of the Relationship Between Inflation and Interest Rates
Barr and Campbell w5821 Inflation, Real Interest Rates, and the Bond Market: A Study of UK Nominal and Index-Linked Government Bond Prices
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us