“Caroline says, as she gets up from the floor, you can hit me all you want, but I don’t love you anymore”
—Lou Reed
As we mentioned before, the eurozone has some interesting similarities with Japan, and many differences, of course. The similarities are an aging population and a corporate structure that resembles a lot the Zaibatsu– Government ties.
That’s probably where the similarities end. But those two factors matter, as we will see later.
There is a third factor that reduces any expected positive impact of monetary policies, and that we mentioned before: overcapacity. See Figure 6.1.
Low capacity utilization is often regarded by mainstream economists as a problem of demand that needs to be “stimulated.” ...
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