ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Interest-Price Nexus-An Old Theme Revisited

The Interest-Price Nexus An Old Theme Revisited D M Nachane Almost all interest rates in India are heavily administered, so that tests of market efficiency in the strict sense appear to be redundant. However, there are three short-term interest rates, viz, the call money rate, the bazaar bill rate and the SBI hundi rate, in which market forces are allowed some role though overall ceiling restrictions are in force from time to time. The relative degree of market efficiency of these three rates is examined here using the methodology of discussions of the relation between inflation and interest rates.

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