Tag Archives: Interest rates

Debt, Demographics and the Distribution of Income: new challenges for monetary policy

Debt, Demographics and the Distribution of Income: new challenges for monetary policy -  Gertjan Vlieghe   Monetary Policy, Interest Rates, Macroeconomics

Monetary policies all over the world are such that interest rates are at their lowest rate ever. In some economies, the rate is negative so that it costs to keep money in banks rather than “under the bed”. This is unprecedented! Despite this, borrowing for new investment is weak – with implications on future productivity and economic growth.

The low interest rates mean that there is little scope to reduce them further, which in turn means that monetary authorities have little scope for managing economic activity – employment, production and investment.

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