The article argues that current market borrowing costs are rising independently of the Federal Reserve's policy stance, challenging the assumption that the Fed controls all rates. Evidence shows significant increases in key rates—such as 2-year Treasuries and mortgages—even while the effective federal funds rate remains steady. This divergence occurs because market rates reflect complex factors like inflation expectations, credit risk, and geopolitical volatility, which are outside the central bank's direct control. Policymakers should therefore recognize that sustainable rate moderation requires credible disinflation and disciplined government budgets, rather than relying solely on Fed intervention.
What Should Policy Do About Carbon Emissions?
English Summary
The article argues that while carbon emissions are a significant externality, traditional clean energy subsidies are an inefficient 'blunt instrument' because they reduce total energy costs and create distorted incentives. A theoretically superior approach is a Pigouvian carbon tax, as it unambiguously raises the price of carbon-based energy, encouraging efficiency. However, due to the political unpopularity and measurement difficulties of carbon taxes, the authors conclude that the most practical, least harmful policy response may be doing nothing, other than eliminating existing subsidies for carbon-based fuels.
中文摘要
本文論述，儘管碳排放是顯著的外部性，但傳統的清潔能源補貼卻是一種效率低下的「粗放工具」，因為它們降低了總能源成本並創造了扭曲的激勵機制。理論上更優越的方法是實施皮古稅碳稅，因為它能明確提高碳基能源的價格，從而鼓勵提高效率。然而，由於碳稅在政治上不受歡迎且衡量困難，作者們結論認為，最實際、傷害最小的政策應對可能是「不採取行動」，除了廢除現有的碳基燃料補貼之外。
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