Can anyone tell us if it is true that if USA raises interest rate, other countries will very likely raise interest rates too?Any theoretical proof to support this argument?

There's no "proof" per se but the argument is based on the global competition for capital. Unless there's inflation in the rate-raising country, a country with a higher rates is more attractive to credit lenders. Whether other countries also raise rates depends on if they are competing for capital, too, versus having other monetary goals such as maintaining an exchange rate that is favorable to exports.Given the large degree of coupling in the global economy and the fact that most central bankers use much the same theories and data to set rates, you'll also find empirical correlations between rate changes, but these may not mean that one country's rate increase caused another country's rate increase.

if a country wants to control inflation and increase its export, will it likely increase it interest rate?For increasing interest rates, is short end or long end or middle end of it yield curve up first?

There are quite complicated mechanics in place. It could happen that when a Country raises Interest Rates (IR), the Currency appreciates hence its exports become less competitive.Shorter term interest rates follow the monetary policy closely. The shorter the closer. In the long end, (inflation) expectations play a critical role. In general, middle end instruments have a more speculative nature, while the very long end are less liquid and generally used by players such as pension funds to offset long term liabilities.

QuoteOriginally posted by: Jif a country wants to control inflation and increase its export, will it likely increase it interest rate?For increasing interest rates, is short end or long end or middle end of it yield curve up first?It's been tried in some countries but shown not to work well and usually blows up in the end. Iceland is a good example.

QuoteOriginally posted by: JCan anyone tell us if it is true that if USA raises interest rate, other countries will very likely raise interest rates too?Any theoretical proof to support this argument?I guess, such decision still remains at national governments discretion However, why are you asking this? Looking at continuously growing size of the US debt, anyone can become doubtful that the US may lose its attractiveness to foreign investors any time soonhttp://www.treas.gov/tic/mfh.txtAfter all the US owes only 94% of its GDP to foreign investors, whereas many other European countries, incl. the UK, stand at staggering 400% of debt..http://en.wikipedia.org/wiki/List_of_co ... ernal_debt