Low rates can harm productivity, say Liu, Mian and Sufi

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New research suggests low interest rates may encourage market concentration and thereby harm productivity, setting out a possible explanation for advanced economies’ lacklustre performance in recent years.

The paper, by Ernest Liu, Atif Mian and Amir Sufi, outlines a model in which market structure and strategic competition matter for economy-wide outcomes. Though lower rates will tend to encourage investment, there may nevertheless be a “discouragement effect” that stops some firms from

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