The Expectations Hypothesis, the Yield Curve, and Monetary Policy

Abstract

Introduction, 457. — I. Elasticity of expectations and empirical and policy implications of the expectations hypothesis, 459. — II. A simplified elastic expectations model, 462; the model, 462; an empirical estimate of responsiveness of expected rates to current short rates, 463. — III. Effects of a swapping operation on the yield curve, 469.