RBA paper finds elusive interest rate-investment link

The RBA at night. Photo: RBA

Researchers at the Reserve Bank of Australia present evidence of an empirical link between interest rates and investment, which has proven elusive in the literature despite its theoretical importance.

Jonathan Hambur and Gianni La Cava make use of “hand-collected” data on the interest rates facing firms in Australia, as they tend to include notes in their company reports on the cost of each debt instrument they hold. This data has often been lacking in other jurisdictions, so other studies have

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