1980, the norwegian economy started to get back on its feet again, but norway ’ s growth potential was low and new imbalances were building up. the fall in oil prices in 1986 sparked a new, and even deeper, crisis in the norwegian economy. the economic policy conducted in the 1970s was intended to follow keynes ’ advice. subsequent developments proved hayek ’ s point. to curb a crisis on a lasting basis, the measures implemented must also address the deeper causes of the crisis. the global financial crisis was triggered by the lehman brothers bankruptcy on 15 september 2008. the crisis has been attributed to a number of factors. one important event was china ’ s accession to the world trade organization ( wto ) on 11 december 2001, almost seven years earlier. with china now a member of the wto, the global labour force expanded considerably. low wages and cheap goods from china exerted downward pressure on goods prices. as china ’ s substantial savings surplus continued to grow, large amounts of savings were exported to the west. inflation slowed in the decade following the turn of the millennium, in spite of high growth and falling unemployment. combined with china ’ s savings surplus, this resulted in persistently low interest rates. low interest rates coincided with weaker regulation of the banking and financial sectors, particularly in the us, but also in europe. that proved to be a dangerous cocktail. banks took more risk and levels of equity capital were too low. household debt rose substantially. in many european countries, government debt ballooned in the shadow of low interest rates. when the crisis erupted in 2008, many were ill - prepared. chap. 8 and 9 in lie, einar and christian venneslan ( 2010 ), over evne : finansdepartementet 1965 – 1992, pax, oslo ( norwegian only ). the expression “ counterstructural policy ” was used by hermod skanland in autumn 1977 when he wrote “ the countercyclical policy conducted in norway has to some extent also become a counterstructural policy ”. skanland ( 1977 ) : “ konjunkturperspektiver og norsk næringsliv ” in sosialøkonomen 10 / 1977, p. 10 ( norwegian only ). bis central bankers ’ speeches two aftershocks – china and europe the global economy is still struggling with the repercussions of the crisis, with record - low interest rates and overcapacity

finds that the relative decrease in consumption after a reduction in income, referred to by economists as the marginal propensity to consume, depends on households ’ financial situation. the literature also refers to the “ wealthy hand - to - mouth ” ( kaplan and violante ( 2018 ) ), ie households with high incomes, illiquid housing assets and relatively high loan - to - value ratios. in the face of higher interest expenses, this group may well react by making a considerable adjustment in consumption. chart : debt and wealth vary through the life cycle 5 / 7 bis central bankers'speeches households ’ financial position can largely be inferred from the stage in the life cycle. the chart shows how assets and debt vary with age. on average, the highest level of debt is for households in the 30 – 40 age group. an interest rate increase will have the greatest impact on this group, which also has modest financial buffers. [ 6 ] this group ’ s wealth primarily comprises illiquid housing assets that may be difficult to draw on in hard times. debt is lower for the older age groups. these groups include people who entered the housing market when house prices were lower. since many have built up liquid wealth in the form of bank deposits or other kinds of assets, net interest income could increase for some. an interest rate increase would likely have a smaller effect on consumption in this group than in younger groups. the oldest age groups are virtually debt - free. many older households have substantial housing wealth and money in the bank. higher interest rates therefore mean higher disposable income and could provide room for some increase in consumption. chart : higher debt ratios in all age groups we have experienced a period of sharply rising house prices and debt. the price of entry into the housing market has increased. the 35 – 45 age group has shown the largest increase in debt ratios, measured in percentage points. debt ratios in both this group and the somewhat younger groups now average around three times post - tax income. these groups have a high marginal propensity to consume. the elevated debt level in these age groups amplifies the cash - flow channel. but young and middle - aged households are not the only groups to borrow more than previously. a somewhat larger share of total household debt is now in fact held by the older age groups. more debt among the older households reflects the fact that older adults are also active in the housing market and are taking on more debt. to the extent an interest rate increase