The Determinants of Long term Interest Rates in Eurozone Taylor Rule and Governance Indicators

Ersoy İ. S., Antmen S.

International Business Research, cilt.9, ss.58-63, 2016 (Hakemli Dergi)

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 9
  • Basım Tarihi: 2016
  • Dergi Adı: International Business Research
  • Derginin Tarandığı İndeksler: IBZ Online
  • Sayfa Sayıları: ss.58-63
  • Marmara Üniversitesi Adresli: Evet

Özet

This study aims to search for the determinants of long-term interest rates in the Eurozone. Panel data analysis is employed for 14 Eurozone countries for the period of 2002-2014 to analyze the determinants of long-term interest rates. This study is carried out to find out whether the Worldwide Governance Indicators (WGI), Taylor (1993) rule and also the Eurozone crisis, as a control variable, have an impact on long-term interest rates. As WGI, Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption are used. The first finding of the empirical study is that inflation gap has an impact on long-term interest rates. Another finding of the study is that Political Stability and Absence of Violence/Terrorism, Government Effectiveness and Regulatory Quality effects long-term interest rates in 14 panel cross-sections. Besides, the analysis shows that the financial crisis in Eurozone as control variable affected long-term interest rates, as would be expected