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Past Event

The fiscal-monetary mix in an era of low interest rates

Past Event

The likelihood that interest rates will be lower than historic norms for the foreseeable future and that, in some future economic downturn, the Federal Reserve will again push short-term interest rates to zero raises significant challenges not only for monetary policymakers but to fiscal policymakers as well. Should monetary and fiscal policy be more coordinated when the Fed hits the effective lower bound? How does “helicopter money” actually  work?  How large a public debt is prudent and optimal in an era of slow growth and low interest rates?

On June 2, the Hutchins Center on Fiscal and Monetary Policy examines these issues with two papers. In one, Federal Reserve Board economists William English, David Lopez-Salido, and Christopher Erceg find that money-financed fiscal expansions – sometimes called helicopter money – can provide a significant boost to an economy but there are risks with this strategy. In the other, Neil Mehrotra of Brown University and the Federal Reserve Bank of Minneapolis analyzes the case that the government can and should borrow more in an era in which inflation-adjusted interest rates are low and economic growth is slow.

 

 

 

Agenda

Paper: Zero lower bound

Neil Mehrotra

Assistant Professor of Economics - Brown University

Research Economist - Federal Reserve Bank of Minneapolis

Paper: Helicopter money

William B. English

Senior Special Adviser to the Board - Board of Governors of the Federal Reserve System

Visiting Faculty - Yale University

David Lopez-Salido

Associate Director of Monetary Affairs - Board of Governors of the Federal Reserve System

Christopher Erceg

Senior Associate Director of International Finance - Board of Governors of the Federal Reserve System

Emi Nakamura

Associate Professor of Business and Economics - Columbia University

Panel

William B. English

Senior Special Adviser to the Board - Board of Governors of the Federal Reserve System

Visiting Faculty - Yale University

Neil Mehrotra

Assistant Professor of Economics - Brown University

Research Economist - Federal Reserve Bank of Minneapolis

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