Low interest rates are the main tool of monetary policy to stimulate investment, but is this always the case? New research by Ernest Liu, Atif Mian and Amir Sufi, shows that the relationship between low interest rates and business investment is much more complicated. Traditional models disregard strategic competition and market structure, once you factor these in, the authors find that lower interest rates benefit industry leaders disproportionately relative to industry laggards. Over time, this results in rising market concentration, reduced dynamism, a widening productivity-gap between industry leaders and followers, and slower productivity growth. Read paper here.