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RBA Glossary definition for Real interest rate

Real interest rate – The real interest rate refers to the cost of borrowing money (i.e. the nominal interest rate) net of inflation. It takes account of the fact that part of the nominal interest that borrowers pay to lenders represents compensation for anticipated inflation. The remaining �real� component better reflects the economic cost of borrowing and the return to lending.

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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Appendix A: Data Sources

1 Nov 1996 RDP 9608
Alison Tarditi
The world short interest rate is calculated as the weighted arithmetic average of short interest rates (3-month Treasury Bills) from the United States, Canada and the United Kingdom. ... Real interest rates for the exchange rate section are calculated by
https://www.rba.gov.au/publications/rdp/1996/9608/appendix-a.html

Modelling the Australian Exchange Rate, Long Bond Yield and Inflationary Expectations

1 Nov 1996 RDP 9608
Alison Tarditi
Research Discussion Paper – RDP 9608 Modelling the Australian Exchange Rate, Long Bond Yield and Inflationary Expectations.
https://www.rba.gov.au/publications/rdp/1996/9608/

Modelling the Australian Exchange Rate, Long Bond Yield and Inflationary Expectations

1 Nov 1996 RDP 9608
Alison Tarditi
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1996/9608.html

Conclusion

1 Nov 1996 RDP 9608
Alison Tarditi
Interest rates and exchange rates now form part of the transmission mechanism by which policy changes feed through to the broader economy. ... Theoretical discussions of interest and exchange rate markets typically characterise expectations as forward
https://www.rba.gov.au/publications/rdp/1996/9608/conclusion.html

The Macroeconomic Model Approach

1 Nov 1996 RDP 9608
Alison Tarditi
The Fisher effect is assumed complete and this delivers the real interest rate. ... Over the long run, international arbitrage ensures that (typically subject to a constant risk premium) domestic and foreign long-term real interest rates are equalised.
https://www.rba.gov.au/publications/rdp/1996/9608/macroeconomic-model-approach.html

Appendix B: The Behavioural Model of the Australian Real Exchange Rate – Integration Tests and Diagnostics

1 Nov 1996 RDP 9608
Alison Tarditi
Table B.4: A Comparison of the Statistical Significance of Competing Measures of Interest Rates in the Real Exchange Rate Equation. ... as a proportion of GDP; and the real long interest rate differential.
https://www.rba.gov.au/publications/rdp/1996/9608/appendix-b.html

Introduction

1 Nov 1996 RDP 9608
Alison Tarditi
Interest rates and exchange rates now constitute two of the most important channels through which macroeconomic policy can affect the broader economy. ... It is widely recognized that expectations play a critical role in these mechanisms, affecting both
https://www.rba.gov.au/publications/rdp/1996/9608/introduction.html

References

1 Nov 1996 RDP 9608
Alison Tarditi
1994), ‘The Link Between the Cash Rate and Market Interest Rates’, Reserve Bank of Australia Research Discussion Paper No. ... 61–91. Orr, A., M. Edey and M. Kennedy (1995), ‘The Determinants of Real Long-Term Interest Rates: 17 Country
https://www.rba.gov.au/publications/rdp/1996/9608/references.html

A Behavioural Model of the Australian Real Exchange Rate

1 Nov 1996 RDP 9608
Alison Tarditi
As customarily measured – using 12-months-ended inflation rates – real short-term interest rate differentials would reflect the prevailing stance of domestic, relative to foreign, monetary policy; but they would fail ... worth noting straight away.
https://www.rba.gov.au/publications/rdp/1996/9608/behavioural-model-of-the-australian-real-exchange-rate.html

A Behavioural Model of the Australian Long-Term Interest Rate

1 Nov 1996 RDP 9608
Alison Tarditi
Table 3: Real Long Interest Rate Model. Dependent variable: Δr. Explanatory variable. ... percentage point; this response occurs more slowly than that estimated for a change in the US real rate (panel 1, Figure 13).
https://www.rba.gov.au/publications/rdp/1996/9608/behavioural-model-of-the-australian-long-term-interest-rate.html