03 - John Cochrane on Finance, the Fiscal Theory of the Price Level, and Blogging
Macro Musings with David Beckworth
00:00
The Slow Adjustment of the Discount Rate
The discount rate has been a reflection of high risk premium ever since the crisis emerged. Why is it taken so long for, you know, risk premiums to adjust back to more normal levels? I mean, spend seven years and still we see these record low interest rates, high prices for government bonds in safe countries. So what's your story for the slow adjustment? Yeah. Well, and here we're telling stories, which is dangerous. These stories can help us understand better the theory.
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