Re: Re: Re: Re: Re: U.S. Monetary Policy

[Edwin Dickens]

Michael Perelman wrote:
> 
> As I recall the explanation, long-term capital investment depends upon
> long-term rates, while short-term consumption is affected by short-term
> rates.  In fact, of course, investment is pretty insensitive to interest
> rates.
> 
The argument has less to do with short-term consumption than with the
management of foreign-exchange reserves.  The interest-rate insensitivity
of investments suggests the irrelevance of a transmission mechanism of
monetary policy via an argument in a mainstream aggregate demand function. 
Heterodox economists tend towards specifying a direct effect of interest
rates on income distribution.