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Monetary Policy After the Coronavirus Crisis
Contributions to Economics ; : 177-190, 2022.
Article in English | Scopus | ID: covidwho-2235639
ABSTRACT
In response to the global coronavirus crisis, central banks all over the world have cut interest rates and introduced other measures to ease monetary policy. The aim of this chapter is to analyze this response, how it changed compared with their response to the global financial crisis of 2007–2009, and how monetary policy might evolve further. In particular, I examine the adequacy of aggregate demand management and interest rate cuts in reference to the global coronavirus crisis and the potential economic impact of the interest rates staying lower for longer. I argue that setting interest rates too low for too long can impair their signaling and allocation functions and cause significant harm in the long run, such as misallocation of resources, excessive risk-taking, zombification of the economy, and accumulation of too much debt. © 2022, The Author(s), under exclusive license to Springer Nature Switzerland AG.
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Full text: Available Collection: Databases of international organizations Database: Scopus Type of study: Prognostic study Language: English Journal: Contributions to Economics Year: 2022 Document Type: Article

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Full text: Available Collection: Databases of international organizations Database: Scopus Type of study: Prognostic study Language: English Journal: Contributions to Economics Year: 2022 Document Type: Article