Research Fellow Randall Holcombe: Risk is not the only factor that affects the return on capital. Government policy can also have a substantial effect. Piketty shows that β has increased substantially in the twenty-first century, which supports his argument of growing inequality. But consider that monetary policy in most of the twenty-first century has been geared toward keeping interest rates low, first under the Greenspan Fed in response to the recession in the early 2000s, and then after 2007 in response to the growing financial crisis. h
Posted on: Sun, 18 May 2014 22:00:01 +0000
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