Abstract
Bill Yang and Mark Yanochik, hereafter Y&Y, raise two main concerns in their comment [Yang and Yanochik, 2005] on our paper [Fields & Hart, 2003 (a)]. The first is that our use of the long-run Classical model to analyze the liquidity preference (LP) and loanable funds (LF) approaches to interest rate determination is questionable because we “inconsistently” take the price level as given. The second is that we have failed to answer the primary question that Y&Y allege we raise in our paper. Specifically, the allegation is that we did not answer the question of which approach, LP or LF, should be used to determine the interest rate. We consider each of these points in turn.
Recommended Citation
(2005)
"Additional Thoughts on the Determination of Interest Rates in General and Partial Equilibrium,"
Journal of Economics and Finance Education: Vol. 4:
Iss.
1, Article 2.
Available at:
https://scholarship.rollins.edu/jefe/vol4/iss1/2
