whose growth is affected by policy, two alternative forms of insurance against encountering the ZLB are available to an activist policy-maker: building a buffer of inflation and

In this paper we have used a simple, two equation model of a closed economy, augmented with an asset-price bubble, to investigate what impact the zero lower bound on nominal

reduced probability of the bubble bursting next period, it is more likely that the inflation will be above target in the second period and so the optimal interest rate in period 1

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Asset price bubbles and monetary policy in a New Keynesian model with overlap- ping generations. The effects of monetary policy on stock market bubbles:

contrast with the earlier literature on rational bubbles, the introduction of nominal rigidities (in the form of prices set in advance) makes room for the central bank to in‡uence

Thus, our numerical example suggests that especially under flexible inflation targeting a pre-emptive interest rate hike during an asset price boom indeed is a reasonable

In this paper, we build on Svensson’s (1997) inflation targeting framework by explicitly taking into account the lagged effect of monetary policy and characterize the optimal

This would help communicate to markets how it is that the purchase program is consistent with a steady state with inflation at target and output at potential.. This would

A further natural extension to the simple version of the model in- volves assuming that, rather than affecting the probability of the bubble bursting, the activist policymaker can,

Kent and Lowe use their model to make the case that, when policy can affect the bubble’s probability of collapse, it may make sense for the policy-maker to raise interest rates early

Potencialno odzivnost obrestnih mer oziroma tržnih donosnosti državnih obveznic Nemčije, Italije in Španije na objave makroekonomskih podatkov smo merili s pomočjo regresijske enačbe,

This paper quantifies the effect of non-traditional monetary easing at the zero lower bound on interest rate, so called “quantitative easing monetary policy” which the BOJ

By contrast, Jaroci´ nski and Smets (2008) use a mixture of zero and sign restrictions to identify monetary policy shocks and find that a persistent 25 basis point tightening of

In the first section of the paper we have used a New Keynesian DSGE framework to verify if a higher permanent inflation target would be welfare improving, given the extremely

Especially when the size of spillover effects can be large as it can be in an environment of lower bound, it is important to observe how the effect of fiscal policy shocks

Keywords: supply shocks, Covid-19, hysteresis, investment, endogenous growth, monetary policy, fiscal policy, zero lower bound, Keynesian growth, stagnation

Intuitively, if monetary policy is unable to lower the current nominal interest rate further, because the zero bound is binding, future monetary policy will have to stabilize