Kocherlakota considers impact of public debt on long-run interest rate
Minneapolis Fed president says higher public debt could help increase rate but at a cost
An increase in the level of US public debt could push up the long-run neutral interest rate, helping to reduce the risk of monetary policy running up against the zero lower bound, but it would come with costs, Federal Reserve Bank of Minneapolis president Narayana Kocherlakota said on September 8.
Kocherlakota told an audience in Illinois that if the government were to issue more debt, the FOMC would be in a position to raise its target for the federal funds rate more rapidly. This, he said
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