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RBA Glossary definition for interest rate
interest rate – The term used to describe the cost of borrowing money or the return to the owner of the funds which are invested or lent out. It is usually expressed as a percent per annum of the amount of money borrowed, lent or invested.
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Simulation Results
1 Nov 1989
RDP
8907
In this simulation we assume that real interest rates rise permanently by 300 basis points. ... The interesting comparison between this shock and the real interest rate shock is that both lead to a rise in nominal interest rates.
https://www.rba.gov.au/publications/rdp/1989/8907/simulation-results.html
Tax Policy and Housing Investment in Australia
1 Nov 1989
RDP
8907
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1989/8907.html
Model Structure
1 Nov 1989
RDP
8907
We can think of the nominal interest rate as being composed of two parts, an inflation premium π and a real component r. ... The information contained in q. should be noted; it contains information on taxes, rents and future rents as well as interest
https://www.rba.gov.au/publications/rdp/1989/8907/model-structure.html
Introduction
1 Nov 1989
RDP
8907
Under this framework, taxes and interest rates affect the profitability and market value of capital in the housing sector. ... in tax policy, inflation and interest rates.
https://www.rba.gov.au/publications/rdp/1989/8907/introduction.html
Conclusion
1 Nov 1989
RDP
8907
in inflation with no change in real interest rates actually increased real investment in housing due to the tax distortions in the model. ... Another is that for investment to remain constant real interest rates have to rise as inflation rises.
https://www.rba.gov.au/publications/rdp/1989/8907/conclusion.html
Numerical Solution of the Model
1 Nov 1989
RDP
8907
g. =. rate at which inflation component of interest income taxed. ... average real price of a home; endogenous. P. L. =. real price of a unit of land; endogenous. q =. =. Tobin's q; endogenous. q. =. modified q; endogenous. r. =. real interest rate;
https://www.rba.gov.au/publications/rdp/1989/8907/numerical-solution-of-the-model.html
Appendix II
1 Nov 1989
RDP
8907
HS. remains constant and that P. s. the price index grows at the rate of inflation π. ... The happy person who owns his house outright has a discount rate i = (1u)r (1g)π.
https://www.rba.gov.au/publications/rdp/1989/8907/appendix-ii.html