Friday, October 21, 2016

Matias Vernengo — Nominal and Real Interest Rates

This seems to suggest to me that the explanation must be related to the short term nominal rate, which is a policy decision of the central bank, rather than something that affects the levels of inflation, and according to some theories (the loanable funds) what that does to savings. If I'm right then, the cause of the low rates is the financial excess of the last three decades, that forced central banks to keep rates low to save the economy, and preclude further problems. Very unlikely that would change any time soon.
Naked Keynesianism
Nominal and Real Interest Rates
Matias Vernengo | Associate Professor of Economics, Bucknell University

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