Treasury Bill Rates in the 1970s and 1980s
Working
Paper 91-6
by Patric H. Hendershott and Joe Peek
1991 Series
Revised article published in Journal of Money, Credit and Banking 24 (May 1992): 195-214.
As is widely recognized, real interest rates in the early 1980s were at peaks not witnessed since the late 1920s. Less well perceived is the sharp decline in real interest rates in the middle 1980s to their average levels of the previous quarter century. This paper seeks to identify the underlying determinants of the major movements in real six-month Treasury bill rates. The primary innovation is the development of a new monetary policy proxy that explains much of the real rate movement in the 1980s.
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