Foto: AFP/LETA
Bloga 1. daļa
Interest rates are very low these days and even the Latvian government could borrow very cheaply (at around 0.5% if we can use the latest data from Eurostat on long-term bond interest rates, see Figure 1).
So why not borrow at low rates, spend the money, create growth and employment and let everybody be happy?
Figure 1: Long-term government bond interest rates, Germany, Italy and Latvia, 2006 - 2016
Source: Eurostat
The proposition is certainly often being purported by Paul Krugman (and others), e.g. here and here and his argument is, in short, that 1) USA (of which he speaks, of course) lacks infrastructure investment 2) USA is not yet at full employment and 3) hysteresis (the idea that poor infrastructure and poor use of employable people is bad for growth not just now but also for future growth potential, e.g. via wasting the skills of those unemployed).
