Narayana Kocherlakota, the Minneapolis Fed President, gave a speech on August 17th in which he said: But over the long run, money is, as we economists like to say, neutral…. [I]f the FOMC maintains the fed funds rate at its current level of 0-25 basis points for too long, both anticipated and actual inflation have [...]
On Time magazine’s Curious Capitalist blog, the blogger decides to solicit behavioral economists for their opinion on a higher tax rate for the super-rich. That is, specifically, what should the tax rate be? Read on: My basic assumption was that behavioral economists would see the question of how people react to tax rates as a [...]
Raghuram Rajan of the University of Chicago, along with William White, former head of the Bank for International Settlements’ monetary and economic department, are arguing for an increase in interest rates. Interest rates near zero risk fanning asset bubbles or propping up inefficient companies, say Rajan and William White, former head of the Bank for International Settlements’ [...]
A few items have been posted: Answer key for last week’s exam. Beta Mgmt. Co. case spreadsheet (please download for tomorrow’s class). A review of regression output variables. Review these for tomorrow – we will be going through all three. They are in the sidebar to the left. addthis_url = ‘http%3A%2F%2Fblog.arnavsheth.net%2F2010%2F08%2F27%2Fitems-posted-2%2F’; addthis_title = ‘Items+Posted’; addthis_pub [...]
The bond market is booming, with investors (some say) diving into safe securities, driving bond prices up and yields down. In addition, the Fed has kept interest rates low for one of the longest periods in history. As a consequence, lots of interesting things are happening in the bond markets. For instance: Companies are issuing [...]
Sales of newly-built homes declined in July, as did the sales of existing homes. See the graph below from Calculated Risk: The gap started to widen starting in 2006 (around the time the housing bubble burst), and continues to widen. The gap will close if: Newly built homes start to sell faster. Existing homes stop [...]
Class, I’ve posted to the blog (see left, under ‘Lecture 4′): The answers to Exam 1 A spreadsheet with: Amortization tables for Problems 4-20a,b,c, and 4-29. Let me know if you have any questions. addthis_url = ‘http%3A%2F%2Fblog.arnavsheth.net%2F2010%2F07%2F31%2Fitems-posted%2F’; addthis_title = ‘Items+Posted’; addthis_pub = ”;
Scientist Jeff Schweitzer has an interesting and unique, but disturbing (and very real) application of the time value of money concept. He says environments in developing countries are being destroyed because of the infinite discount rates of their starving populations. They prefer the immediate provision of (say) fish from the sea, rather than the distant [...]
James Surowiecki (over at the New Yorker), wrote about financial illiteracy in the issue from a couple of weeks ago. The bad news is that we Americans are clueless about finance, and particularly, our personal finances: The depth of our financial ignorance is startling. In recent years, Annamaria Lusardi, an economist at Dartmouth and the [...]
It was nice meeting you all last week. I hope you enjoyed it as much as I did. A couple of things: I mentioned last week, that I was on the fence about you using Excel for all your calculations. Well, I have hopped over the fence and decided that you may use Excel for [...]