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An overheating economy: What to expect?

What can policymakers do to avoid overheating?

One way to cool economic growth is to increase interest rates, which reduces the level of demand and encourages households to save more.

As too much borrowing can lead to asset bubbles, notably in housing markets, another possible scenario is an increase in the average mortgage interest rates and reduction in soft loan programs.

Finally, to tackle the issues of capacity limits, governments may also increase taxes. The money they save from such a policy could then be put aside for use at a time when demand in the economy is weaker.

However, according to Gref, in such a situation "there is no universal recipe".

An overheating economy: What to expect? What can policymakers do to avoid overheating?

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23 июля 2024