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Gauti Eggertsson, Andrea Ferrero, Andrea Raffo [PDF] have come up with a result many people would find a counter-intuitive. They show that when monetary policy hits the lower bound, structural reforms in labour and product markets to boost competitiveness, do not help, and even be counter-productive. The reason is that in the absence of an offsetting monetary stimulus, reforms fuel expectations of prolonged deflation, increase the real interest rate, and depress aggregate demand.
...a result many people would find a counter-intuitive...
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