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Nakata, Taisuke - 2017

Macroeconomists are increasingly using nonlinear models to account for the effects of risk in the analysis of business cycles. In the monetary business cycle models widely used at central banks, an explicit recognition of risk generates a wedge between the inflation-target parameter in the...

Persistent link: https://www.econbiz.de/10012963934

Average Inflation Targeting and the Interest Rate Lower Bound

Nakata, Taisuke - 2020

Assigning a discretionary central bank a mandate to stabilize an average inflation rate—rather than a period-by-period inflation rate—increases welfare in a New Keynesian model with an occasionally binding lower bound on nominal interest rates. Under rational expectations, the...

Persistent link: https://www.econbiz.de/10012836660

Lack of Confidence, the Zero Lower Bound, and the Virtue of Fiscal Rules

Schmidt, Sebastian - 2015

prone to equilibrium multiplicity. A drop in confidence can drive the economy into a liquidity trap without any change in … from declining in the face of a confidence shock insulate the economy from such expectations-driven liquidity traps …

Persistent link: https://www.econbiz.de/10013020664

Gradualism and Liquidity Traps

Nakata, Taisuke - 2017

Modifying the objective function of a discretionary central bank to include an interest-rate smoothing objective increases the welfare of an economy where large contractionary shocks occasionally force the central bank to lower the policy rate to its effective lower bound. The central bank with...

Persistent link: https://www.econbiz.de/10012963935

Macroeconomic Stabilization, Monetary-Fiscal Interactions, and Europe's Monetary Union

Corsetti, Giancarlo - 2017

The euro area has been experiencing a prolonged period of weak economic activity and very low inflation. This paper reviews models of business cycle stabilization with an eye to formulating lessons for policy in the euro area. According to standard models, after a large recessionary shock...

Persistent link: https://www.econbiz.de/10012963947

Attenuating the Forward Guidance Puzzle : Implications for Optimal Monetary Policy

Nakata, Taisuke - 2019

We examine the implications of less powerful forward guidance for optimal policy using a sticky-price model with an eﬀective lower bound (ELB) on nominal interest rates as well as a discounted Euler equation and Phillips curve. When the private-sector agents discount future economic conditions...

Persistent link: https://www.econbiz.de/10012895031

Expectations-Driven Liquidity Traps : Implications for Monetary and Fiscal Policy

Nakata, Taisuke - 2019

can give rise to persistent liquidity trap episodes. Unlike in the case of fundamental-driven liquidity traps, there is no …-driven liquidity traps. Raising the inflation target or appointing an inflation-conservative central banker improves inflation outcomes … sufficiently less concerned with government spending stabilization than society can eliminate expectations-driven liquidity traps …

Persistent link: https://www.econbiz.de/10012865525

Fiscal Activism and the Zero Nominal Interest Rate Bound

Schmidt, Sebastian - 2014

-maker uses government spending more aggressively to stabilise inflation and the output gap in a liquidity trap than an authority …

Persistent link: https://www.econbiz.de/10013058237

Conservatism and Liquidity Traps

Nakata, Taisuke - 2015

In an economy with an occasionally binding zero lower bound (ZLB) constraint, the anticipation of future ZLB episodes creates a trade-off for discretionary central banks between inflation and output stabilization. As a consequence, inflation systematically falls below target even when the policy...

Persistent link: https://www.econbiz.de/10013020587

The Risky Steady State and the Interest Rate Lower Bound

Hills, Timothy - 2016

Even when the policy rate is not at the effective lower bound (ELB), the possibility that the policy rate will become constrained by the ELB in the future lowers today's inflation by creating tail risk in future inflation and thus reducing expected inflation. In an empirically rich model...

Persistent link: https://www.econbiz.de/10012988551