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There are two main fitted curves currently used in US dollar fixed income - the LIBOR curve, and a risk-free curve. The instruments comprising the risk-free curve include: Fed Funds, settlement balances at the Fed General collateral Treasury repo. Fed Funds futures. Treasury bills/bonds/notes, futures. Overnight Index Swaps (OIS). The Federal policy rates (...


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In theoretical literature LIBOR rate and central bank's rate (for example Fed's fund rate) are often used interchangeably (see many examples in Freixas and Rochet: Microeconomics of Banking). The reason why they are used interchangeably is that there is quite a strong proportional relationship between them and LIBOR rate depends on the Fed's fund rate. ...


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If you are referring to wages when you say 'nominal incomes' then you are reversing cause and effect. What happens first is the intervention by the central bank to artificially lower interest rates which ultimately increases the money supply. When the extra liquidity finds itself in consumer goods, the cost of living increases for the average wage-earner. ...


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I am studying economics at university and we have to study a lot of various theories of capital in our courses. As muflon says this is taught quite a lot, but we were not taught much about the old debates just the new stuff. But what the other answer did not mention is that capital theory is also tough outside macroeconomics. For example in our inequality ...


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My impression as a non-economist is that there has not been much interest in the 21st century in these debates and it is not taught to students. This is misconception but understandable one (I will get to the understandable part at the end). According to The New Palgrave Dictionary of Economics (Becker, 2017) - leading source for economic terminology - ...


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Post-Keynesians still talk about it, but it’s mainly in reference to the historical controversy. (I haven’t followed it myself.) I’ve seen some references to this paper: Cohen, Avi J., and Geoffrey C. Harcourt. "Retrospectives: whatever happened to the Cambridge capital theory controversies?." Journal of Economic Perspectives 17.1 (2003): 199-214.


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Your formula isn't quite right. If $r$ is the nominal interest rate, and $\pi$ is the inflation rate, the real interest rate is $\frac {1+r}{1+\pi}-1$. The formula $r-\pi$ is approximation for small rates. (Note: for all of this, I'm using "rate" to mean the multiplicative factor minus one. So if the balance is multiplied by 1.2, the rate is 0.2.) ...


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The Fed doesn't cut mortgage rates by buying MBS. MBS didn't even exist until 1980s. The fed funds rates affects the rate at which banks can borrow from the fed, and hence the rate banks are willing to lend to people. Only in the case of the adjustable rate mortgage (ARM) does the fed rate directly affect the mortgage rate. Almost all mortgages rates are ...


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Low velocity results in low interest rates - not the other way around. And with a lower demand for money, there is a lower need to economize on your holdings. And the principal reason why velocity has fallen is the impoundment and idling of savings in our payment's system. Banks are "Black Holes". Banks do not loan out existing deposits. Banks ...


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The Fed funds rate is the rate at which commercial banks can borrow reserves on the overnight market (see this explanation at Investopedia). As such it affects all other interest rates banks charge since when they can borrow more cheaply they can also lend money cheaply to consumers. This affects among others also student loans (when they are provided by ...


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