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[–] ForTheUltimate ago  (edited ago)

The 1930 to 1968 period looks bad for my theory. The overall trend form 1980-1955 suggests that raising interest rates above the previous high purges malinvestments allowing you to recover the economy at higher lows in interest rates, and thus climb overtime. Whereas if you raise interest rates at below what they were before, you don't purge enough malinvestments and so you approach the zero-bound as lower lows in interest rates are required to support a recovery weighed by increasing malinvestment.