How High Interest Rates Harm Innovation
Monetary policy decisions can have meaningful long-term effects.
How High Interest Rates Harm InnovationHigher education has grown increasingly expensive in the United States, and many students and graduates end up saddled with large debt balances before their careers have even begun. But Chicago Booth’s Constantine Yannelis and his coauthors find that debt can do more than finance a degree—it can also help pay for significant non-educational purchases, including a first home. Examining borrowers on either side of an age-based cutoff that determines how much students can borrow, the researchers find that students with access to increased liquidity via heavier borrowing were significantly more likely to purchase a home over the next several years. Yannelis says that policy makers should bear this effect in mind when considering whether and how to reform the student-debt system in the United States.
Monetary policy decisions can have meaningful long-term effects.
How High Interest Rates Harm InnovationIn Chicago, underinvesting in affordable housing increased overall inequality.
Razing Public Housing Led to GentrificationEconomists consider to what degree network effects will help Twitter as some users grow concerned about the platform.
Will Twitter’s Size Protect It from Defections?Your Privacy
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