https://www.taxtmi.com/news?id=11503 Lowering the real interest rate can stimulate investment and growth, but tolerating higher inflation to achieve lower real rates is unsustainable because above a threshold inflation's negative effects on growth outweigh benefits. Real interest rates are the pertinent macro price for growth; central banks influence them via responses to inflation and financial repression/reforms. Empirical estimates show increases in real rates reduce investment and moderate GDP growth, and firm-level pressures-declining marginal productivity of capital, falling IRR, cash-flow constraints and stalled projects-mean nominal rates must be compared to contemporaneous IRR and fall sufficiently to restore the hurdle rate below firms' IRR to revive investment. en-us Thu, 08 Aug 2013 12:04:28 +0530 Thu, 08 Aug 2013 12:04:28 +0530 TaxTMI RSS Generator https://www.taxtmi.com/news?id=11503 Lowering the real interest rate can stimulate investment and growth, but tolerating higher inflation to achieve lower real rates is unsustainable because above a threshold inflation's negative effects on growth outweigh benefits. Real interest rates are the pertinent macro price for growth; central banks influence them via responses to inflation and financial repression/reforms. Empirical estimates show increases in real rates reduce investment and moderate GDP growth, and firm-level pressures-declining marginal productivity of capital, falling IRR, cash-flow constraints and stalled projects-mean nominal rates must be compared to contemporaneous IRR and fall sufficiently to restore the hurdle rate below firms' IRR to revive investment. News - Thu, 08 Aug 2013 12:04:28 +0530 https://www.taxtmi.com/news?id=11503