Interest rates and the reorganisation of the Dutch business community

BNR Economenpanel
Casper de Vries
Erasmus School of Economics

Casper de Vries, Professor Emeritus of Monetary Economics at Erasmus School of Economics, recently sat at the BNR panel of economists. Here, he discussed the news that central banks are keeping their interest rates unchanged and the increase in the number of reorganisations in the Dutch business community.

Currently, there is a wave of bankruptcy in the Netherlands. Monetary policy normally has a duration of more than a year. About a year and a half ago, interest rates were increased, and the effect is now visible. This is a healthy functioning of the market and was even expected earlier by Casper de Vries. Companies that would not be able to survive under normal market conditions are now facing the results of this market effect.

Central banks

In contrast to America, where a substantial decline is visible, interest rates remain unchanged. However, this does not mean that the battle against inflation has been won, as it is difficult to predict. Therefore, economists should not concern themselves with that. In addition, it is now clear, especially in America, what political purpose interest rates can entail. Fiscal dominance means that the central bank has to play though in this situation. 

Reorganisation of the Dutch business community

Before 1900, there was a similar economy to what we are experiencing now. Therefore, we should look at economic history. The labour market is too tight and needs to be worked on. Yet in practice, making choices proves difficult. For example, people do not want an increase in the state pension age and are saying no to labour migration. Efforts must be made to retrain for other sectors at an older age, so that people with physical professions can continue to work for a long time.

More information

You can listen to the full podcast from BNR Nieuwsradio, 18 December 2023, here

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