I think forward interest rates are mostly driven by things like changing economic productivity and sentiment, and that the Fed is mostly along for the ride.
Excellent paper you've written here. Just wondering how much of the recent yield run up (and inflation) might be due to fiscal easing not much, if at all, offset monetarily by the Fed? If so, then the Fred's relative (to fiscal easing) inaction is a contributor to the run up, though perhaps not "the" driver. "The" driver would then be the fiscal authorities, but that is a political question!
Thanks. Great question. I do think there is a fiscal element to recent inflation, but I’m not a big fan of fiscal theories of interest rate trends. I can’t say that I have a thorough background on that opinion, though.
Agreed. Once you admit that monetary/fiscal interaction can at times be impactful then any "single cause" for interest rate trends like fiscal theory becomes redundant. And the genie is let out of the bottle. Productivity/demographics/political (in)stability/level of financial intermediation/etc are all plausible contributors also, especially "etc"!
Excellent paper you've written here. Just wondering how much of the recent yield run up (and inflation) might be due to fiscal easing not much, if at all, offset monetarily by the Fed? If so, then the Fred's relative (to fiscal easing) inaction is a contributor to the run up, though perhaps not "the" driver. "The" driver would then be the fiscal authorities, but that is a political question!
Thanks. Great question. I do think there is a fiscal element to recent inflation, but I’m not a big fan of fiscal theories of interest rate trends. I can’t say that I have a thorough background on that opinion, though.
Agreed. Once you admit that monetary/fiscal interaction can at times be impactful then any "single cause" for interest rate trends like fiscal theory becomes redundant. And the genie is let out of the bottle. Productivity/demographics/political (in)stability/level of financial intermediation/etc are all plausible contributors also, especially "etc"!