convert_ir: Convert between (Primitive) Period Interest Rates and...

In GE: General Equilibrium Modeling

Convert between (Primitive) Period Interest Rates and (Primitive) Intraperiod Interest Rates

Description

This function converts between (primitive) period interest rates and (primitive) intraperiod interest rates. Here, a period is considered as the shortest term for monetary lending.

The primitive interest rate is defined as the interest rate when the money stock is adjusted to be constant under the assumption of monetary neutrality.

In the structural dynamic model, the period interest rate refers to the interest rate at which principal and interest are repaid at the beginning of the next period after borrowing money in the current period, while the intraperiod interest rate refers to the interest rate at which the principal and interest are repaid during the current period after borrowing money in the current period.

When the velocity of money is equal to one, these two types of interest rates are the same. When the velocity of money, namely vm, is greater than one, the intraperiod interest will be repaid in vm installments within the period, and there is usually a difference between the two types of interest rates.

Usage

convert_ir(ir, vm, to = c("period", "intraperiod"))

Arguments

ir	a vector consisting of period interest rates or intraperiod interest rates.
vm	a scalar, or a vector consisting of velocities of money. The velocity of money in each period is usually a positive integer.
to	type of conversion. Can be abbreviated.

Value

A vector consisting of intraperiod interest rates or period interest rates.

Examples

ir <- seq(0, 1, 0.1)
plot(ir, convert_ir(ir, 2, "period"), "b")
plot(ir, convert_ir(ir, 2, "intraperiod"), "b")

GE documentation built on April 4, 2025, 5:33 a.m.