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How Should Monetary Policy be Conducted in an Era of Price Stability?
Svensson, Lars E.O. - 2000
price stability. The benefits of credibility (private inflation expectations coinciding with the inflation target) are … discussed. Credibility improves the tradeoff between inflation variability, output-gap variability and instrument variability …
Persistent link: https://www.econbiz.de/10012471258
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Credible Commitment to Optimal Escape from a Liquidity Trap : The Role of the Balance Sheet of an Independent Central Bank
Jeanne, Olivier - 2004
An independent central bank can manage its balance sheet and its capital so as to commit itself to a depreciation of its currency and an exchange-rate peg. This way, the central bank can implement the optimal escape from a liquidity trap, which involves a commitment to higher future inflation....
Persistent link: https://www.econbiz.de/10012468011
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Rules, Discretion and Reputation in a Model of Monetary Policy
Barro, Robert J. - 1983
In a discretionary regime the monetary authority can print more money and create more inflation than people expect. But, although these inflation surprises can have some benefits, they cannot arise systematically in equilibrium when people understand the policymaker's incentives and form their...
Persistent link: https://www.econbiz.de/10012478024
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Transparency and Credibility : Monetary Policy with Unobservable Goals
Faust, Jon - 1998
We define and study transparency, credibility, and reputation in a model where the central bank's characteristics are … unobservable to the private sector and are inferred from the policy outcome. A low-credibility bank optimally conducts a more … inflationary policy than a high-credibility bank, in the sense that it induces higher inflation, but a less expansionary policy in …
Persistent link: https://www.econbiz.de/10012472353
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Liquidity Traps : How to Avoid Them and How to Escape Them
Buiter, Willem H. - 1999
The paper considers ways of avoiding a liquidity trap and ways of getting out of one. Unless lower short nominal interest rates are associated with significantly lower interest volatility, a lower average rate of inflation, which will be associated with lower expected nominal interest rates,...
Persistent link: https://www.econbiz.de/10012471545
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The Liquidity Trap and the Pigou Effect : A Dynamic Analysis with Rational Expectations
McCallum, Bennett T. - 1982
A Keynesian idea of considerable historical importance is that, in the presence of a liquidity trap, a competitive economy may lack--despite price flexibility--automatic market mechanisms that tend to eliminate excess supplies of labor. The standard classical counterargument, which relies upon...
Persistent link: https://www.econbiz.de/10012478214
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Liquidity Traps : An Interest-Rate-Based Exit Strategy
Schmitt-Grohé, Stephanie - 2010
This paper analyzes a potential strategy for escaping liquidity traps. The strategy is based on an augmented Taylor-type interest-rate feedback rule and differs from usual specifications in that when inflation falls below a threshold, the central bank temporarily deviates from the traditional...
Persistent link: https://www.econbiz.de/10012462143
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Credit Traps
Benmelech, Efraim - 2010
This paper studies the limitations of monetary policy transmission within a credit channel frame- work. We show that, under certain circumstances, the credit channel transmission mechanism fails in that liquidity injections by the central bank into the banking sector are hoarded and not lent...
Persistent link: https://www.econbiz.de/10012462457
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Monetary Policy, Asset-Price Bubbles and the Zero Lower Bound
Robinson, Tim - 2005
We use a simple model of a closed economy to study the recommendations of monetary policy-makers, attempting to respond optimally to an asset-price bubble whose stochastic properties they understand. We focus on the impact which the zero lower bound (ZLB) on nominal interest rates has on the...
Persistent link: https://www.econbiz.de/10012467580
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A Monetary Policy Rule for Automatic Prevention of a Liquidity Trap
McCallum, Bennett T. - 2005
In analyses of "liquidity trap" problems associated with the zero lower bound (ZLB) on nominal interest rates, it is important to emphasize the difference between policy rule changes, intended to help escape an existing ZLB situation, and maintained policy rules designed so as to avoid ZLB...
Persistent link: https://www.econbiz.de/10012467631