![American Economic Review journal](https://bse.eu/sites/default/files/styles/bgse_image_content_image/public/aer.jpg?itok=N0SNpyLN)
The paper “The Paradox of Global Thrift” by Luca Fornaro (CREI, UPF and BSE) and Federica Romei has been published in the American Economic Review.
This paper describes a paradox of global thrift. Prudential policies are effective in individual countries, but it can backfire if they are applied on a global scale because they depress output in countries at the zero lower bound. Due to this effect, noncooperative financial and fiscal policies might lead to a fall in global output and welfare.