Interest rates: June 1977 to June 1982

Abstract

The purpose of this note is to make a description of the behavior of interest rates between June 1977 and June 1982, a period in which they were freely determined in the market by the interaction of supply and demand. To do this, the behavior of nominal and real passive and active rates is described, linking them with the different economic policy schemes implemented during the five years in question. Given that the real interest rate treated is obtained ex post, the relationship between nominal interest rates and inflation expectations is analyzed under the assumption of adaptive expectations for the entire period under study and for the different periods individualized in the previous points. Next, causality tests are carried out between the passive and active interest rates and the respective relevant inflation indices. Then the relationship of the domestic interest rate with the international interest rate and with inflation expectations is studied.

JEL classification: E31 ; E43