... low inflation makes fiscal consolidation harder. It - TopicsExpress



          

... low inflation makes fiscal consolidation harder. It automatically reduces the growth in nominal GDP and all else equal, raises the debt to GDP ratio. Debt dynamics would be left unchanged if nominal interest rates fall by the same magnitude as inflation. But that wont happen if interest rates are jammed against the zero nominal bound as they are in the euro zone, and pretty much the entire rich world.
Posted on: Tue, 09 Sep 2014 07:21:42 +0000

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