John Stayte

Date of Award

2025

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Khemraj, Tarron

Area of Concentration

Economics with Finance

Abstract

This thesis is an investigation of the United States Treasury yield curve, focusing on its ability to predict economic growth in the 21st century. Academic studies done in the late 20th century brought the yield curve into the spotlight as one of the most accurate indicators of future economic growth available. It has been used as a tool by government and private sector actors to guide decision making since the publishing of those studies. However, it has exhibited odd behavior in recent years, inverting for record periods of time without producing the recession that was forecasted by the inversion. This behavior exhibited by the yield curve, along with fundamental changes in how institutions related to the yield curve act, have raised questions about its predictive powers. This study sets out to address the yield curve’s behavior over the last 20 years to determine if it has held its historical predictive abilities despite its recent behavior. The yield curve will be tested using a commonly cited interest rate spread, against a variety of key economic variables via Granger-Causality tests, to determine if it still deserves its place as a respected indicator leading the US economy in the 21st century.

Download

Share

COinS