TY - JOUR
T1 - The Yield Spread and Real Economic Activity
T2 - The Impact of Globalisation
AU - Hawtrey, K. M.
PY - 2002
Y1 - 2002
N2 - One of the enduring linkages between financial markets and the real economy is that the shape of the interest rate curve is seen as a good predictor of future output growth. However, little is known about the effect of globalisation on this relationship. This paper examines whether, in the wake of the intemationalisation of the Australian economy during the past decade and a half, there is today an identifiable relationship between the foreign yield spread and Australian GDP growth. Using the US interest rate spread as a proxy for the world yield curve, a link is found to exist with Australian GDP growth. There is evidence the link has strengthened as the economy has seen greater exposure to globalisation.
AB - One of the enduring linkages between financial markets and the real economy is that the shape of the interest rate curve is seen as a good predictor of future output growth. However, little is known about the effect of globalisation on this relationship. This paper examines whether, in the wake of the intemationalisation of the Australian economy during the past decade and a half, there is today an identifiable relationship between the foreign yield spread and Australian GDP growth. Using the US interest rate spread as a proxy for the world yield curve, a link is found to exist with Australian GDP growth. There is evidence the link has strengthened as the economy has seen greater exposure to globalisation.
UR - http://www.scopus.com/inward/record.url?scp=84929996909&partnerID=8YFLogxK
U2 - 10.1016/S0313-5926(02)50029-1
DO - 10.1016/S0313-5926(02)50029-1
M3 - Article
AN - SCOPUS:84929996909
SN - 0313-5926
VL - 32
SP - 203
EP - 219
JO - Economic Analysis and Policy
JF - Economic Analysis and Policy
IS - 2
ER -