Re: C-span hearings/interest rates

["Per Gunnar Berglund" <pgb@xxxxxxxxxxxxxxxxxx>]

Randy,
Thanks for your comments.
	1) Sorry, I should have checked the US CPI imputation procedure before
writing. Over here, we still use interest costs of owner-occupied housing
in the CPI. Anyway, wouldn't an interest rate hike translate into higher
CPI in the United States as well, regardless of the owner-occupied housing
imputation method?
	2) No, I would prefer not to drop the real interest rate, which I think is
a very important concept, provided it is correctly defined. I have been
writing a number of posts on the subject of definition and measurement of
capital volumes, on the need for an Asset Price Index, and on the
productivity gains to be had from low real interest rates. So far, these
posts have attracted little or no visible interest. All of them are, of
course, connected to the same theoretical nexus, a nexus which, I am
afraid, seems to have very little attraction power on the PKTers in
general.

Best,
Per

Per Gunnar Berglund
Lilla Sallskapets vag 60
127 61  SKARHOLMEN
SWEDEN

Voice/fax +46-(0)8-883065

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Randy Wray wrote:

> i am agreed on all the major points, but:
> 1. in the us case, interest rates do NOT get into the cpi thru owner
> occupied housing portion of consumer basket; they more or less did
> until the early 1980s, but no longer. see the brief by papadimitriou
> and wray from levy inst.
> 2. drop the "real interest rate" and substitute "nominal interest
> rate"; nothing can be more unreal than real interest rates.
> randy wray