Takeaway: Conventional economic wisdom holds that when a central bank cuts interest rates, commercial banks lower their own lending rates to encourage borrowing. However, new research shows that because of how central banks shift market liquidity, rate cuts can actually cause heavily constrained banks to raise loan rates and reduce lending. Key Points Policy Mechanism: Central banks change interbank interest rates by buying or selling government bonds, which directly alters t

This study uses randomized admissions lotteries to examine how different types of charter schools affect students' long-term educational paths, revealing that state test scores do not always predict whether a school helps its students earn a college degree.

Joining an emissions trading scheme can lower a company’s borrowing costs, but only if the carbon market is active enough to give banks a reliable signal of the firm's environmental health.

A sharp increase in federal pandemic relief funds for relatively affluent school districts did not improve student test scores, primarily because districts used the windfall to lower local property taxes rather than increase overall school spending.