1
$\begingroup$

Are the historical data sets of short term treasury bill rates considered the same as the historical data sets of savings account interest rates because by definition they are both risk free rates of returns?

$\endgroup$
1
  • $\begingroup$ That depends on how you intend to use the data. $\endgroup$ Apr 19, 2014 at 12:54

1 Answer 1

3
$\begingroup$

From a note of P. Krugman (link):

enter image description here

So no it is not. Why ? I would say 3 cause:

First: Dynamics, saving rates are longterm figures. Offer and demand would be different for these products. Some time there is a lack of liquidity and a need of financement, so a huge demand in short term bonds.

Second: bank margin, reserve policies, they have to earn some money, they have to support some risk, follow rules and laws...

Third: risk free rates of returns is a theoretical construction, there is no such thing in real life. Some rates would approach it but wont be the same.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge that you have read and understand our privacy policy and code of conduct.

Not the answer you're looking for? Browse other questions tagged or ask your own question.