Collateral Scarcity, Inflation, and the Policy Trap: A New Monetarist Perspective
نویسندگان
چکیده
We construct a model that captures New Monetarist ideas in order to explain post-Great Recession observations on inflation, nominal interest rates, and real interest rates. When finance constraints bind, the model can deliver low real interest rates and positive rates of inflation at the zero lower bound. Optimal monetary policy in the face of a financial crisis shock implies a positive nominal interest rate. The model reveals some novel perils of Taylor rules.
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