Imperfect credibility and the zero lower bound
نویسندگان
چکیده
منابع مشابه
Imperfect Credibility and the Zero Lower Bound on the Nominal Interest Rate
When the nominal interest rate reaches its zero lower bound, credibility is crucial for conducting forward guidance. We determine optimal policy in a New Keynesian model when the central bank has imperfect credibility and cannot set the nominal interest rate below zero. In our model, an announcement of a low interest rate for an extended period does not necessarily reflect high credibility. Eve...
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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 paper presents a theory of the real effects of disinflation. As in New Kcyncsian models, price adjustment is staggered across firms. As in New Classical models. credihiltty is imperfect: the monetary authorrty may not complete a promised disinflation. The cwnbination of imperfect credibility and staggering yields more plausible results than 4ther of these assumptions alone. In particular. ...
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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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ژورنال
عنوان ژورنال: Journal of Monetary Economics
سال: 2012
ISSN: 0304-3932
DOI: 10.1016/j.jmoneco.2012.01.002