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April 03, 2005
Macro students: please read
This excellent speech by Ben Bernanke should be read by every macroeconomics student. I think it is good that Fed governors actually get out there in the public and make speeches like this once in a while.
Here's a sample.
The person in the street might tell you that the Fed "controls interest rates." That statement is not literally accurate. In fact, the Fed has little or no direct influence over the interest rates that matter most for the economy, such as mortgage rates, corporate bond rates, or the rates on Treasury securities. Instead, the Fed affects these key rates, as well as the prices of financial assets such as stocks, only indirectly.
Thanks to macroblog for the link.
Posted by William Polley at April 3, 2005 10:25 PM
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