Will Diamond on Safe Assets, Risk-Free Rates, and Convenience Yields and their Implications for Policy

William Diamond is an Assistant Professor of Finance at the Wharton School of Business at the University of Pennsylvania. Will joins David on Macro Musings to discuss safe assets, convenience yields, bubbles and public debt and the implications for policy. Specifically, David and Will get into competing theories of interest rates and the rise of New Keynesian thinking, the role of the dollar in the global financial system, the drivers behind the growth in US debt, how the construction of risk-free interest rates unaffected by convenience yields on safe assets can improve our understanding of the financial system in times of stress, and much more.   Check out Ideas of India: https://www.discoursemagazine.com/tag/ideas-of-india-podcast/, and subscribe to Ideas of India on your favorite podcast app.   Transcript for the episode can be found here.   Will’s Twitter: @wdiamond_econ Will’s Wharton profile: https://fnce.wharton.upenn.edu/profile/diamondw/#research   Related Links:   *Threats to Central Bank Independence: High-Frequency Identification with Twitter* by Francesco Bianchi, Thilo Kind & Howard Kung https://www.nber.org/papers/w26308   *Safety Transformation and the Structure of the Financial System* by Will Diamond https://faculty.wharton.upenn.edu/wp-content/uploads/2017/07/modelwriteupnew23.pdf   *From World Banker to World Venture Capitalist: The US External Adjustment and the Exorbitant Privilege* by Helene Ray and P.O. Gourinchas https://papers.ssrn.com/sol3/papers.cfm?abstract_id=788428   *Rational Bubbles and Public Debt Policy: A Quantitative Analysis* by David Domeij and Tore Ellingsen https://www.sciencedirect.com/science/article/abs/pii/S0304393218301909   *Liquidity Premiums on Government Debt and the Fiscal Theory of the Price Level* by Aleksander Berentsen and Christopher J. Waller https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2943241   *Risk Free Interest Rates* by Jules H. van Binsbergen, Will Diamond, and Marco Grotteria https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3242836   *Risk-Free Rates and Convenience Yields Around the World* by Will Diamond, Peter Van Tassel https://faculty.wharton.upenn.edu/wp-content/uploads/2021/11/newdraft_11132021formatfix.pdf   David’s Twitter: @DavidBeckworth David’s blog: http://macromarketmusings.blogspot.com/