Why are interest rates so low in the Unites States? We find that they are low primarily because the premium for safety and liquidity has increased since the late 1990s, and to a lesser extent because economic growth has slowed. We reach this conclusion using two complementary perspectives: a...

This paper compares the properties of interest rate rules such as simple Taylor rules and rules that respond to price-level fluctuations - called Wicksellian rules - in a basic forward-looking model. By introducing appropriate history dependence in policy, Wicksellian rules perform better than...

We study the impact of interest rate changes on both the demand and supply of new light vehicles in an environment where consumers and manufacturers face their own interest rates. An increase in the consumers' interest rate raises their cost of financing and thus lowers the demand for new...