Fornaro, LucaRomei, FedericaUniversitat Pompeu Fabra. Departament d'Economia i Empresa2020-05-252020-05-252016-12-01American Economic Review, 109 (11), 2019, 3745-3779http://hdl.handle.net/10230/44717This paper describes a paradox of global thrift. Consider a world in which interest rates are low and monetary policy is constrained by the zero lower bound. Now imagine that governments implement prudential financial and fiscal policies to stabilize the economy. We show that these policies, while effective from the perspective of individual countries, might backre if applied on a global scale. In fact, prudential policies generate a rise in the global supply of savings and a drop in global aggregate demand. Weaker global aggregate demand depresses output in countries at the zero lower bound. Due to this effect, non-cooperative nancial and scal policies might lead to a fall in global output and welfare.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative CommonsThe paradox of global thrift<resourceType xmlns="http://datacite.org/schema/kernel-3" resourceTypeGeneral="Other">info:eu-repo/semantics/workingPaper</resourceType><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">liquidity traps</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">zero lower bound</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">capital flows</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">fi scal policies</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">macroprudential policies</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">current account policies</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">aggregate demand externalities</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">international cooperation.</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">Macroeconomics and International Economics</subject><rights xmlns="http://datacite.org/schema/kernel-3">info:eu-repo/semantics/openAccess</rights>