Martin Sandbu’s scientific contributions

... For instance, in a country experiencing the peak of its economic cycle, such as Spain during the pre-2008 period, an interest rate set too low relative to its domestic conditions can exacerbate inflationary pressures. As inflation rises, the real interest rate, defined as the nominal interest rate minus the inflation rate, declines further, effectively making borrowing cheaper and fueling additional economic overheating 10 (Sandbu, 2015). This generates a feedback loop: excessive credit expansion and asset price bubbles intensify. ...

Reference:

The causal links between the (financial and) sovereign debt crisis, and the raise of anti-system politics. Was the latter the inevitable consequence of the former? The cases of the UK and Spain