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

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Assessing the Level of Interest Rates in Less Developed Countries

Assessing the Level of Interest Rates in Less Developed Countries Deena R Khatkhate This paper underscores the difficulties of measuring the level of real interest rates and suggests an alternative to approximate real interest rates in less developed countries (LDCs). The rationale for doing so lies in the fact that there needs to be a reasonable relationship between domestic nominal interest rate and adjusted foreign interest rate since, even in LDCs with trade and exchange controls, domestic currency and financial assets are always substituted, legally or otherwise, for foreign currency and financial assets.

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