Ricardo Reis on the Macroeconomics of Financial Crises and the Recent Inflation Surge
Macro Musings with David Beckworth
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How to Set Interest Rates Subject to a Neutral Rate
The Taylor rule is always conditional on our subject to how should you set interest rates. In an integrated capital market, there's only one neutral rate because any if the interest rate in Germany was in from the Portuguese one,. Then capital will exactly flow in a world of misallocation capital flows. The return in different areas in different sectors, even in the economy, forget different countries across different firms. Those interstates are different. They don't get equalized, precisely because of misallocated.
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