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Low for Long? Causes and Consequences of Persistently Low Interest Rates: The 17th Geneva Report on the World Economy

Low for Long? Causes and Consequences of Persistently Low Interest Rates: The 17th Geneva Report on the World Economy

          
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About the Book

The 17th Geneva Report on the World Economy examines the causes of the unusually low interest rates seen in recent years, asks whether they are likely to persist, and explores the possible consequences. Regarding the causes, the report argues that demographic developments and Chinese financial integration have been important drivers, reinforced since the crisis by a reluctance to invest and a shift in investor preferences toward safe assets. But some of these forces are likely to reverse in the future, suggesting that the current period of unusually low interest rates is unlikely to persist indefinitely.

The pace at which that reversal will happen remains highly uncertain, however, and dependent on longer-term policy choices. The return to historically more normal levels of interest rates may, consequently, be quite drawn out and policymakers need to be alert to the consequences. Aside from increasing the frequency with which monetary policies are constrained by the lower bound on policy rates, persistently low interest rates on safe assets also encourage the adoption of strategies to lever up returns, so heightening the risks to financial stability. While macro prudential policies represent the first line of defense against such risks, policymakers should be careful not to expect too much from them.


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Product Details
  • ISBN-13: 9781907142949
  • Publisher: Centre for Economic Policy Research
  • Publisher Imprint: Centre for Economic Policy Research
  • Height: 229 mm
  • No of Pages: 122
  • Series Title: English
  • Sub Title: The 17th Geneva Report on the World Economy
  • Width: 152 mm
  • ISBN-10: 1907142940
  • Publisher Date: 24 Nov 2015
  • Binding: Paperback
  • Language: English
  • Returnable: N
  • Spine Width: 10 mm
  • Weight: 241 gr


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