Money, Banking, and Financial Markets

Understand the principles, understand the future

When President Nixon and Chairman Mao shook hands in Beijing in 1972, only 17% of the 862 million Chinese lived in urban areas and the entire stock of housing was state owned. Today, more than half of China’s 1.4 billion residents live in cities, while 9 out of 10 households own their homes. Unsurprisingly, this housing revolution has brought with it a property price boom. Over the past decade, urban land prices have risen more than four-fold, with high flyers like Beijing surging by a factor of more than 10 (for the data, see here).

Will China follow the same path the U.S. took in the last decade? Will China’s boom turn into a bust?...

Interview with Duvvuri Subbarao

Former Governor, Reserve Bank of India

Has the experience of the crisis changed your view of the central bank policy toolkit?

Governor Subbarao: Most certainly. Post crisis, I believe, the central bank toolkit has expanded in three important dimensions: (i) deployment of unconventional monetary policy by way of quantitative easing (QE); (ii) extensive use of forward guidance; and (iii) use of macroprudential policies to maintain financial stability. Each of these policy tools has spawned a vigorous debate on its appropriateness and effectiveness. Let me briefly refer to the contours of those debates.

To read the full article, click the headline.
Further commentary, click here.

Welcome to ...

... the site where you can learn about finance and economics. We provide commentary on events in the news and on questions of more lasting interest. Because the financial system is constantly evolving, our analysis is informed by a set of core principles: understand the principles, understand the future. The opening excerpts of our two most recent posts appear above. For prior posts, click on the Commentary link to the left, or on the month-by-month Archives to the right. Alternatively, if you are interested in a specific topic, use the tags.

The site also provides material related to our textbook, Money, Banking and Financial Markets, 4th edition, 2014. The Five Core Principles on which the book is based are highlighted here. In addition, Cecchetti and Schoenholtz 4e systematically integrates the use of economic and financial data from FRED, the online database provided by the Federal Reserve Bank of St. Louis. Click on FRED Lessons on the left to access help on how to use this incredible resource.

Steve Cecchetti and Kim Schoenholtz


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