If in period t the zero lower bound on the euro nominal interest rate becomes a binding constraint, I assume, for simplicity, that the authorities set the period t

The dependence of the size of the consumption losses on the steady state real interest rate, displayed in fi gure 1, suggests that the lower bound in fl icts sizable welfare

This is illustrated in fi gure 1, which reports the increase in the consumption losses associated with taking into account the zero lower bound under discretionary policy, as a

Instead of attempting to raise infl ation expectations, central banks sought to lower interest rates further along the yield curve by providing more certainty about policy rates

Keywords : monetary policy rules, zero-interest-rate bound, liquidity trap, rational expec- tations, nominal rigidities, exchange rates, monetary transmission.. ∗

The paper reviews issues related to the zero lower bound (ZLB) on interest rates and argues that all of the following propositions are invalid: (1) in a ZLB situation, “shaping

This paper sets up a New Keynesian model in which the monetary authority implements a zero lower bound interest rate policy, and uses it to explore whether the supportive

Even though nominal interest rates are constrained at zero, the central bank may improve performance substantially by devaluing the exchange rate and switching to an exchange-rate

We analyse the macroeconomic effects of a protracted period of low and falling inflation rates when monetary policy is constrained by the zero lower bound (ZLB) on nominal

The above discussion suggests that adopting a target path for the price level can effectively allow the central bank to achieve a lower average rate of inflation in the economy

Using a small micro-founded closed-economy model Eggertson and Woodford (2003) show that it is optimal for the central bank to com- mit to keeping nominal interest rates lower in

Overall, the results from the experiment without the risk premium shocks are con- sistent with the …ndings reported in Schmitt-Grohe and Uribe (2005), which show that in a model

• To effectively represent the characteristics of a traffic flow in terms of vehicle platoons, the following vital variables must be measured – the platoon size, the average

They are: (i) shaping or managing interest-rate expectations -- that is, providing assurance to the private sector that policy rates will be lower in the

Overview of maximum output losses and minimum nominal interest rates under different shock scenarios and monetary policy rules in the “old regime”.. Further scenario details as well

from falling into a situation of zero nominal rates in the first place, the central bank should sustain a higher long-run average rate of inflation than would be the case without

WHEREAS, the majority Shareholders of Directors of the Meeks and Daley Water Company have considered the circumstances of the state of emergency and finds that state or

As one may in- fer from the aggregate-supply relation, equation (2), the higher is the degree of in fl ation indexation in the economy the more in fl ation has to be promised in