Downward interest rate rigidity
نویسندگان
چکیده
Empirical evidence suggests that bank lending rates are downward rigid: banks tend to adjust their more slowly and less completely short-term market decreases than increases. We investigate the macroeconomic consequences of this interest rate rigidity by introducing asymmetric adjustment costs in a macrofinance dynamic stochastic general equilibrium model. Calibrating model euro area economy, we find difference initial response GDP positive negative economic shocks similar amplitude can reach up 25%. This means central would have cut its policy much obtain symmetric medium-run impact on GDP. also show is stronger when stuck at effective lower bound, further disrupting monetary transmission. These findings imply neglecting asymmetry retail adjustments may yield misguided decisions.
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ژورنال
عنوان ژورنال: European Economic Review
سال: 2021
ISSN: ['1873-572X', '0014-2921']
DOI: https://doi.org/10.1016/j.euroecorev.2021.103787