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Greece and the German elections II: Creating a desert and calling it "reform" | 8 comments (8 topical, editorial, 0 hidden)
Re: German elections II: Creating a desert (4.00 / 4)
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

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Greece and the German elections II: Creating a desert and calling it "reform" | 8 comments (8 topical, 0 editorial, 0 hidden)
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