Fiscal policy needed to tackle next crisis – Riksbank research


Lower interest rates limit the scope for monetary policy to overcome the next crisis, but it facilitates government borrowing and opens the door to fiscal stimulus, says research published by Sveriges Riksbank.

Björn Lagerwall from the Riksbank’s monetary policy department argues policy-makers have two options to overcome the zero lower bound. Firstly, they could change the current inflation targeting frameworks by “increasing the level of the target or introducing price level targets”

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