Bodenstein, Martin; Hebden, James; Nunes, Ricardo - In: Journal of Monetary Economics 59 (2012) 2, pp. 135-149
As the nominal interest rate cannot fall below zero, a central bank with imperfect credibility faces a significant challenge to stabilize the economy in a New Keynesian model during a large recession. We characterize the optimal monetary policy at the zero lower bound for the nominal interest...