Arbeitspapier
Adverse Effects of Ultra-Loose Monetary Policies on Investment, Growth and Income Distribution
The paper analyses adverse investment, growth and distributional effects of ultra-loose monetary policies based on the monetary overinvestment theories of Hayek and Mises. We argue that ultra-loose monetary policies create incentives to substitute real investment by financial investment. When interest rates are expected to fall in the long term, the marginal and average efficiency of investments fall along, dampening GDP growth. We further show that the prolonged period of very low interest rates tends to distribute income towards higher income classes. This helps explain why consumer price inflation in most advanced economies does not pick up despite unprecedented monetary expansions.
- Language
-
Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 5754
- Classification
-
Wirtschaft
Monetary Policy
Central Banks and Their Policies
International Policy Coordination and Transmission
Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- Subject
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Hayek
Mises
monetary overinvestment theory
asymmetric monetary policy
financial crisis
marginal productivity of investment
secular stagnation
- Event
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Geistige Schöpfung
- (who)
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Hoffmann, Andreas
Schnabl, Gunther
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2016
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hoffmann, Andreas
- Schnabl, Gunther
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2016
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