There's a new paper out that might actually explain why rates stayed high after COVID — and it's not the lazy "inflation" answer everyone's been parroting.
TimWillems, Paolo Cavallino, and Paul Beaudry published something that cuts through the usual macro noise. Most people still can't explain why real rates didn't collapse back down after the inflation spike faded. This paper offers a framework that actually makes sense.
If you've been confused why the Fed can't just "go back to normal" — or why bond markets keep repricing higher despite cooling inflation — this is worth reading. Not because it's the final word, but because it's one of the first serious attempts to answer the question everyone's been dodging since 2022.
Macro is messy. But some explanations are better than others. This one's better than most.
TimWillems, Paolo Cavallino, and Paul Beaudry published something that cuts through the usual macro noise. Most people still can't explain why real rates didn't collapse back down after the inflation spike faded. This paper offers a framework that actually makes sense.
If you've been confused why the Fed can't just "go back to normal" — or why bond markets keep repricing higher despite cooling inflation — this is worth reading. Not because it's the final word, but because it's one of the first serious attempts to answer the question everyone's been dodging since 2022.
Macro is messy. But some explanations are better than others. This one's better than most.
