Tag Info

Hot answers tagged

3

From a note of P. Krugman (link): So no it is not. Why ? I would say 3 cause: First: Dynamics, saving rates are longterm figures. Offer and demand would be different for these products. Some time there is a lack of liquidity and a need of financement, so a huge demand in short term bonds. Second: bank margin, reserve policies, they have to earn some ...


1

I think that you have to distinguish between a 'fiat' (modern) monetary system and a 'gold standard' one. But sustainability will always be ensured endogenously, one way or another. Fiat money is created whenever a loan is made, and the \$50 you describe will be created endogenously in the economy. Advocates would call it a virtous rather than a vicious ...


1

The interest does not necessarily come from another loan. The ECB is paying interest to banks which is essentially to create ("print") new money. It is a fact, that the money supply is constantly growing over time, which in a simple model would just equal the interest paid out on loans. That does not necessarily have something to do with the economy being ...


1

Forward points are calculated by the short term interest rate desks (STIR) and, because central banks and governments don't often change their money market base rates, the fluctuations set by the interest rate markets are infrequent. The interest rates depend on the money markets. Forex all-in rates are calculated depending on the interest rate premium, or ...


1

Lagged means past values. The lag can be by as long as you want. If Interest Rates today are 0% and yesterday they were 0.25%. Yesterdays value is what we call the lagged value. Let's say its now 2012 and we are looking at IR in yearly frequency. IR is 0.1%. To lag IR we simply look back at the last value. So what was IR last year? It was 0.3%. Notice how ...



Only top voted, non community-wiki answers of a minimum length are eligible