Unformatted text preview: been drastically curtailed, the major problem Table 3
Real Interest Rates
(government bond yields deflated by expected GDP deflatora)
Germany 1994–5 1998–9 4.9
3.0 Notes: a Price expectations are proxied by the OECD’s end-year forecasts for the GDP deflator for years
t, t+1, and t+2.
Sources: IMF, International Financial Statistics (1999 Yearbook and July 2000); OECD, Economic
Outlook (various issues). 6 A. Boltho and J. Corbett is associated with unfavourable price and/or
exchange-rate expectations. In this view anything that could lead to anticipations of future
inflation or of exchange-rate stability would stimulate demand and hence growth;
(ii) the alternative view holds that demand management policies can do little, since the major reason
for today’s difficulties is a supply one. Traditional
rigidities on the one hand, earlier excessive investment on the other, prevent capital accumulation, and it is only with the passage of time, and
with the acceleration of regulatory reforms,...
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