20  Guerrieri and Lorenzoni (2011) point out that an unanticipated tightening of borrowing constraints during a financial crisis leads to a fall in the natural rate of interest. First, borrowers facing financial constraints have to deleverage. Second, even lenders not facing financial constraints have to increase precautionary savings once they become aware of the risk that their constraints may bind in the future.
Similarly, Eggertson and Krugman (2012) claim that the natural rate of interest declines and deflationary pressure becomes large during the deleveraging process, induced by a tightening in the financial constraints. 6  BIS central bankers’ speeches  Kingdom is that it has similar Schumpeterian effects, although this scheme’s origin may be different from those of the fund provisioning measures of the Bank of Japan.