Money, Banking, and Financial Markets

Understand the principles, understand the future

Monetary policymakers always worry about inflation expectations. They can’t directly observe what households and business anticipate for the future path of prices, so they construct estimates from market prices and surveys. Why do they care so much? The reason is simple: keeping inflation expectations low and stable is the first step to keeping inflation low and stable. It also makes the economy more resilient in the face of adverse shocks...

The SEC has finally acted.  On July 23, the SEC issued 859 pages of new rules for the operation of some money market funds. (You can find a mercifully short description here.)  To summarize our reaction: we are underwhelmed!  It is hard to see how the new rules will reduce systemic risk in any meaningful way...

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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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