Could Ultra-Low Interest Rates Be Contractionary? (Project-Syndicate)

Although low interest rates have traditionally been viewed as positive for economic growth because they encourage businesses to invest in enhancing productivity, this may not be the case. Instead, extremely low rates may lead to slower growth by increasing market concentration and thus weakening firms’ incentive to boost productivity.

https://www.project-syndicate.org/commentary/why-ultra-low-interest-rates-hurt-growth-by-ernest-liu-et-al-2019-09

Ernest Liu is a professor at the Bendheim Center for Finance at Princeton University.

Atif Mian is Professor of Economics, Public Policy, and Finance at Princeton University, Director of the Julis-Rabinowitz Center for Public Policy and Finance at the Woodrow Wilson School, and co-author of House of Debt.

Amir Sufi, Professor of Economics and Public Policy at the University of Chicago Booth School of Business, is the co-author of House of Debt.

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