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What Is Reverse Causation and How Does It Relate to Reduced-Form

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Essay

What is reverse causation and how does it relate to reduced-form evidence on monetary policy transmission?


Definitions:

Population

The total number of individuals or entities within a defined area or group at a specific time.

Per Annum

An annual rate or measurement, often used in the context of interest rates or financial growth rates.

Compounds Interest

Interest calculated on the initial principal as well as the accumulated interest of previous periods of a deposit or loan.

APR Loans

The Annual Percentage Rate of a loan encompasses the yearly interest rate plus any additional fees, representing the actual cost of borrowing.

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