An article in the New York Times quotes former Fed Chairman Alan Greenspan as arguing: The global
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An article in the New York Times quotes former Fed Chairman Alan Greenspan as arguing:
The global house price bubble was a consequence of lower interest rates, but it was long-term interest rates that galvanized home asset prices, not the overnight rates of central banks, as has become the seemingly conventional wisdom.
a. What is a “house price bubble”?
b. Why would long-term interest rates have a closer connection than overnight interest rates to house prices?
c. Why would it matter to Greenspan whether low long-term interest rates were more responsible than low short-term interest rates for the housing bubble?
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Related Book For
Money, Banking, and the Financial System
ISBN: 978-0134524061
3rd edition
Authors: R. Glenn Hubbard, Anthony Patrick O'Brien
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