The Trilemma for Low Interest Rate Macroeconomics

Abstract

Three desirable goals of macroeconomic policy are: full employment, low inflation, and a low debt level with no Ponzi scheme. This paper shows that, when the natural real interest rate is persistently depressed, at most two of these three goals can be simultaneously achieved. Depending of the parameters of the economy, each of the three possibilities can be the preferred option, resulting in a non-trivial policy trilemma.

Tijdstip: 
Donderdag 17 november 2022, 16:30
Organisatie: 
National Bank of Belgium, KU Leuven, UAntwerpen, UCLouvain, UGent, ULB, ULiège, UNamur and VUB
Spreker(s): 
Jean-Baptiste Michau (Ecole Polytechnique, France)
Plaats: 
Conference Room Lamfalussy, entrance: bd de Berlaimont 14, 1000 Brussels & Microsoft Teams meeting
Toegangsprijs: 
gratis