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| Home > Research literature > Working papers > The paradox of global thrift |
| Imprint: | Barcelona Graduate School of Economics 2016 |
| Description: | 57 p. |
| Abstract: | This paper describes a paradox of global thrift. Consider a world in which interest rates are low and monetary policy is constrained by the zero lower bound. Now imagine that governments implement prudential financial and fiscal policies to stabilize the economy. We show that these policies, while effective from the perspective of individual countries, might backre if applied on a global scale. In fact, prudential policies generate a rise in the global supply of savings and a drop in global aggregate demand. Weaker global aggregate demand depresses output in countries at the zero lower bound. Due to this effect, non-cooperative nancial and scal policies might lead to a fall in global output and welfare. |
| Rights: | Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original.  |
| Language: | Anglès |
| Series: | Barcelona Graduate School of Economics. ADEMU working paper series |
| Series: | Economics and Business Working Papers Series ; 1609 |
| Document: | Working paper |
| Subject: | Liquidity traps ; Zero lower bound ; Capital flows ; Fiscal policies ; Macroprudential policies ; Current account policies ; Aggregate demand externalities ; International cooperation ; Macroeconomics and International Economics |
57 p, 970.4 KB |
