Tuesday, January 24, 2017

Are Negative Interest Rates Dangerous? A debate on negative interest rates

A debate between Tom Palley and Adam Posen. From Tom's argument:
A negative interest rate policy (NIRP) appears revolutionary, but its justification rests on failed, pre-Keynesian “clas- sical” economics. This claims that lower interest rates can al- ways solve aggregate demand shortages and lead to full employment. Keynes discredited classical economics by showing that saving and investment might not respond, as assumed, to lower interest rates.
Read the debate here.
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