Thursday, 22 June 2017

Monthly Archives August 2016

Don’t blame central bankers for persistently low interest rates

August 23, 2016

Many who are supportive of free markets blame central banks for the low interest rates that have prevailed since the end of the 2007-8 financial crisis.  This is a mistake. Central banks can, in the short run and all else being equal, lower market interest rates through expansionary open market operations.  But this ‘liquidity effect’ […]

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Natural rate of interest: Is it that low?

August 10, 2016

One of the open questions since the subprime crisis is whether or not the natural rate of interest is as low as the federal funds rate. The natural interest rate is the rate that equilibrates production over time. However, this concept is more subtle than output being equal to potential output– it also implies that production is distributed […]

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