EFF: I have a new paper, "Does the Fed Control Interest Rates?". In it, I find that The Federal funds rate, FF, moves strongly toward the Fed's target, TF, but other rates show little day-to-day convergence to TF. When the Fed changes TF, it moves toward existing short rates. This suggests a passive Fed that follows the market, but it is also consistent with an active Fed that controls rates and rates adjust to reflect predictable changes in TF. When TF changes, short rates move toward the new TF. This is consistent with a Fed that controls short rates or a Fed that has no control but is an informed investor whose signals affect rates.

KRF: Professor Robert Lucas of the University of Chicago has an interesting guest article in The Economist, "In defense of the dismal science."

EFF/KRF: For an interesting and colorful economic analysis of the proposed U.S. Healthcare Bill we recommend "Health Care Mythology" by Cliff Asness, a Chicago Booth Ph.D.

EFF/KRF: The Economist provides unusually clear and accurate analysis of economic and financial issues. You can download podcasts from The Economist on iTunes.