Abstract
The various theories of interest rate determination presented in economics textbooks each spotlight a particular fundamental force behind the equilibrium rate. Unfortunately, each theory’s successful emphasis of one determinant of the interest rate comes at the cost of distorting some other aspect of its determination. This paper argues that the basic market analysis of debt securities (e.g., bonds and commercial paper) left out of most macroeconomic as well as money and banking textbooks provides a straightforward and practical perspective on interest rate determination that can help students navigate the established interest rate theories.
Recommended Citation
(2007)
"Reconsidering the Introduction to Interest Rate Theory,"
Journal of Economics and Finance Education: Vol. 6:
Iss.
1, Article 5.
Available at:
https://scholarship.rollins.edu/jefe/vol6/iss1/5
