Abstract: Every six weeks or so, the financial news spends several days anticipating the announcement of the Federal Reserve's short-term interest-rate target and, once it has been announced, several days dissecting its policy implications. Whenever long-term bond rates rise or fall significantly, again it is a matter for intense financial commentary. Why? The short answer is that for anyone who borrows money to pay for college, buy a car, a digital camera, or any other good, every rise in interest rates makes things a little bit tighter, and every fall a little bit easier. A significant drop in mortgage interest rates can start a boom, not only in the real estate market but also in anything that might be financed with a home-equity loan. And equally, any significant rise can quickly cool these markets off. It is vitally important to macroeconomics to understand how interest rates behave: What determines their levels? What makes them change?
Publication Year: 2011
Publication Date: 2011-11-14
Language: en
Type: book-chapter
Indexed In: ['crossref']
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Cited By Count: 7
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