Equity prices, long-term interest rates and risk spreads, and exchange rates show strong reactions to developments abroad, and, in recent months, foreign developments have at times been the dominant factor driving U.S.  2  BIS central bankers’ speeches  financial conditions.
While macroeconomic policies are to the fore right now around the world, as governments and central banks seek to foster recovery from recession, in the long term our living standards depend more on innovation and productivity, and less on the manipulation of interest rates or aggregate spending decisions by governments, than common discussion often admits.