On the other hand, such variations would be of greater concern if they reflected a higher incidence of factors such as short periods of unemployment or loss of income due to health problems.
When I say “central,” I mean that this mechanism may play a role not only in determining how monetary policy influences the pricing of credit risk, but also in how it shapes the real and nominal yield curves for credit-risk-free Treasury securities. Of course, much work remains to be done before statements like these can be made with any degree of confidence.