Finance

The Gold Standard: Touted by Some Presidential Candidates, Disliked by Economists

Several Republican presidential candidates have endorsed — or said they'd consider — putting America back on the gold standard. Sen. Ted Cruz has been the most outspoken, arguing that pegging the dollar to gold would make monetary decisions less arbitrary than the ones currently made by the Fed. Professional economists, however, overwhelmingly reject the idea that the dollar should be tied to the price of gold. Recently, finance professor Albert "Pete" Kyle, answered questions about some issues raised by this perennial monetary-policy issue. Read more ...

High Corporate Taxes Incentivize Corporate Debt

Multinational American companies with significant operations in countries with low corporate taxes take on less debt than companies that face higher taxes, according to a new study from the Smith School. A link between higher corporate taxes and debt levels is predicted by economic theory, but some recent studies have failed to find such a connection. In this new study, however, the authors assume U.S. companies will keep their foreign profits abroad indefinitely. Read more ...

Low Interest Rates and 'Secular Stagnation'

In Switzerland, some customers are watching their bank accounts shrink each month, even if they don't make any withdrawals. In Denmark, when you repay your loan you don't add interest to the payment, you subtract interest. The banks are literally paying people to borrow money. This is the strange new world of negative interest rates. It's a byproduct, according to Smith School professor Haluk Unal, of a global phenomenon called "secular stagnation" Read more ...

Will the Fed Act?

Janet Yellen, the Fed chairwoman, has said that raising interest rates before the end of the year is "a live possibility," given the relatively strong performance by the economy. Other Fed governors, however, have said that low levels of inflation mean that a rate hike would be premature. A division over interest-rate policy was also evident in a recent panel discussion among finance experts at the Smith School. Read more...

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