tailieunhanh - Monetary policy, real cost of capital, financial markets and the real economic growth

In this paper we deal with the recent (1995-2018) Federal Reserve operated monetary policies, which were two unprecedented and distinct monetary policy regimes. The inflation stabilization era (1995-2008) and the zero interest rate era (2008-2015). These different monetary policy regimes provided different outcomes for inflation, interest rates, financial markets, personal consumption, and real economic growth. Some of the important results are that monetary policy appears to be able to affect long-term real interest rates, risk, the prices of the financial assets, and very little the real personal consumption and the real economic growth. The Fed’s interest rate target was set during these seven years at 0% to . We are trying to explain the low level of long-term interest rates and the negative real rate of interest (cost of capital). The evidence suggests that this monetary policy was not very effective; it has created a new bubble in the financial market, future inflation, and a redistribution of wealth from risk-averse savers to banks and risk-taker speculators. It has increased the risk (RP) by making the real risk-free rate of interest negative. The effects on growth and employment were gradual and small, due to outsourcing and unfair trade policies. | Monetary policy, real cost of capital, financial markets and the real economic growth

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