Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314287 
Year of Publication: 
2024
Citation: 
[Journal:] Journal of Applied Economics [ISSN:] 1667-6726 [Volume:] 27 [Issue:] 1 [Article No.:] 2385243 [Year:] 2024 [Pages:] 1-22
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
The present study aims to empirically analyze the relationship between the growth in money supply and the long-term interest rates in India through the application of efficient market theory. The study uses quarterly data over a period from 2010 to 2023. The advantage of the efficient market approach is that it provides a theoretical structure for explaining the relationship between the money stock and long-term rates. From the evidence, it can be suggested that there is no strong evidence for the view that growth in money supply is negatively correlated with changes in long-term interest rates. The implications of the study depend on the treatment of money supply processes in terms of exogeneity. If the growth in money supply is assumed to be exogenous, then the result of the present study opposes the commonly held view that an increase in the money supply would decrease the long-term interest rate.
Subjects: 
efficient market theory
long-term interest rates
Monetary policy
money supply
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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