Hanno Lustig on Fiscal Dominance, Inflation, and the Effects of Long-term Interest Rate Decline
Macro Musings with David Beckworth
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Is There a Real Transfer in Europe?
If e c b keeps rates really, really low, negative, even for the sake of italy. That would mean for a place like germany, though is overheating, right? So you would see higher inflation in germany,. which would kind of be a real loss to them, as well as i would affect the real exchange rate. And so you ffectively would see real transfers from germany to italy. By the fact that prices would be different in these two countries, you're still forcing this transfer.
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