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Just today: When structural reforms backfire (Eurointelligence, 10 September 2013)
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.


Finance is the brain [tumour] of the economy
by Carrie (migeru at eurotrib dot com) on Tue Sep 10th, 2013 at 04:59:24 PM EST
Wrong even in theory. Again.
by Colman (colman at eurotrib.com) on Tue Sep 10th, 2013 at 05:12:19 PM EST
[ Parent ]
...a result many people would find a counter-intuitive...

A large portion of those who find this counter-intuitive must be part of the ECB, the EC or northern european political class.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Sep 10th, 2013 at 07:14:57 PM EST
[ Parent ]
Therefore, if you find it intuitive you must be an unperson.

Finance is the brain [tumour] of the economy
by Carrie (migeru at eurotrib dot com) on Fri Sep 13th, 2013 at 06:21:49 PM EST
[ Parent ]
At least an un-serious-person

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 13th, 2013 at 08:14:34 PM EST
[ Parent ]

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