October 18, 2011
In an article about the IMF reversing its pro-austerity stance, the Post told readers:
“Central banks, which have already reduced interest rates to extremely low levels, have little remaining ability to boost economic activity.”
This is not true. Central banks could explicitly target higher rates of inflation. This would lower real interest rates and reduce debt burdens. This policy has been advocated by many prominent economists, including Paul Krugman, Ken Rogoff, the former chief economist of the IMF, and Ben Bernanke when he was still a professor at Princeton.
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