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FORECASTING THE TREASURY BILL RATE: A TIME‐VARYING COEFFICIENT APPROACH
Journal article   Peer reviewed

FORECASTING THE TREASURY BILL RATE: A TIME‐VARYING COEFFICIENT APPROACH

Thomas C. Chiang and Douglas R. Kahl
The Journal of financial research, v 14(4), pp 327-336
1991

Abstract

In this paper a time‐varying coefficient model is developed using a Kalman filter methodology to test the term structure of interest rates. Since the model is characterized by continuing revision of the estimates when new information arrives, it is capable of capturing the dynamic interest rate behavior, thereby increasing the forecasting accuracy of the future spot rates. With the constant expectations hypothesis rejected, the forecasting accuracy is substantially increased.

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Collaboration types
Domestic collaboration
Web of Science research areas
Business, Finance
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