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Is there a Zero Lower Bound?
In a recent research, four European Central Bank economists found that negative interest rate policy in the eurozone can encourage banks to increase lending and encourage cooperations to increase investments.That is, contrary to what macroeconomics models usually predict, interest rate policy can still has stimulative effect even the zero lower bound is reached.
Signs of Eurozone Recession is More Apparent
The latest Purchasing Manager Index (PMI) for the two largest economies, Germany and France, is showing a clear sign of looming recession.