Mankiw and Miron (1986) explain the disparate results from the empirical literature about the predictive power of the term spread between long and short interest rates. They argue that this is due to the effect of monetary policy combined with the presence of a time-varying term premium....

Extensive research on the linkages between monetary conditions and stock returns has been conducted in developed countries. This is in sharp contrast to the situation in developing countries. This paper therefore aims to study the long believed asymmetrical relationship between changes in...