EclectEcon

Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca


. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Friday, December 24, 2004

A Good Example of Interest Rate Parity

According to this piece in the NYTimes (registration required),

The euro briefly traded at $1.35 against the dollar, with traders around the world betting that the dollar would fall further next year.
and

But long-term interest rates, even though they remain extremely low, have been affected by the dollar's decline.

Analysts note that investors are now demanding higher yields from 10-year Treasury bonds than from comparable European bonds.


 
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