The Zero Lower Bound and Endogenous Uncertainty
نویسندگان
چکیده
منابع مشابه
The Zero Lower Bound
In the standard New Keynesian model, monetary policy is often described by an interest rate rule (e.g. a Taylor rule) that moves the interest rate in response to deviations of inflation and some measure of economic activity from target. Nominal interest rates are bound from below by 0 – since money is storable, one would never accept a negative nominal return. How does the behavior of the NK mo...
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This article uses a DSGE framework to evaluate the role of monetary policy in determining the likelihood of encountering the zero lower bound. We find that the probability of experiencing episodes of being at zero lower bound depends almost exclusively on the monetary policy rule. A policy rule, such as the one proposed by Taylor (1993) which is based on the dual mandate is highly likely to lea...
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The United States and most other advanced countries are closing on five years of flat-out expansionary monetary policy that has failed in all cases to restore normal conditions of employment and output. These countries have been in liquidity traps, where monetary policies that normally expand the economy by enlarging the monetary base are ineffectual. Reserves have become near-perfect substitut...
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How do low real interest rates constrain monetary policy? Is the zero lower bound optimal if the real interest rate is suffi ciently low? What is the role of forward guidance? A model is constructed that can incorporate sticky price frictions, collateral constraints, and conventional monetary distortions. The model has neo-Fisherian properties. Forward guidance in a liquidity trap works through...
متن کاملDispersed Inflation Expectations and the Zero Lower Bound∗
Survey data on expectations shows that households have heterogeneous inflation expectations and their inflation expectations respond sluggishly to realized shocks to future inflation. By contrast, in models with a zero bound on the nominal interest rate currently used for monetary and fiscal policy analysis, households’ inflation expectations are not heterogeneous and not sticky. This paper sol...
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ژورنال
عنوان ژورنال: The Economic Journal
سال: 2017
ISSN: 0013-0133,1468-0297
DOI: 10.1111/ecoj.12445