Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192451 
Authors: 
Year of Publication: 
2006
Series/Report no.: 
Discussion Papers No. 469
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
The financial markets in a small open economy like the Scandinavian countries are influenced by international economic developments, especially in their major trading partners. This paper investigates to which degree nominal long-term interest rates in Norway, Sweden and Denmark are determined by fundamental domestic macroeconomic variables and by international economic conditions. Relating the level of interest rates to international macroeconomic variables also sheds some light on the degree of financial marketintegration. In Norway the currency risk, exchange rate regime, international debt and unemployment in Europe are significant in explaining the interest rate differential. In Sweden domestic and US inflation are important, while for Denmark domestic debt, domestic and US money stock, and less significantly US inflation are determinants of the interest rate differential. In these three countries with quite different economies the expectations hypothesis, the effect of domestic growth and unemployment and of international growth are not supported as determinants of long-term interest rate differentials.
Subjects: 
long-term interst rates
expectation hypothesis
international macroeconomic influence
crowding out
JEL: 
E43
E44
Document Type: 
Working Paper

Files in This Item:
File
Size
1.25 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.