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is a predictable consequence of a symmetric monetary policy strategy that fails to recognize the risk of encountering the …-target inflation corrects the bias, improves welfare, and reduces the risk of deflationary spirals - a pathological situation in which …
Persistent link: https://www.econbiz.de/10012651566
We examine how private sector agents might learn a new monetary strategy that is adopted while at the ELB. Little can be discovered until the economy improves enough that rates would be near liftoff under the old strategy. Recessionary shocks would thus delay learning while large inflationary...
Persistent link: https://www.econbiz.de/10014330977