We study the incidence and severity of lower-bound episodes and the efficacy of three types of state-dependent policies—forward guidance about the future path of interest rates, large-scale asset purchases and spending-based fiscal stimulus—in ameliorating the adverse consequences stemming...

Abstract. We study the functioning of a system in the presence of the zero lower bound constraint on the nominal interest rate under the assumption that agents have limited cognitive capabilities. In order to do so, we employ a micro founded heterogeneous expectations New Keynesian model in...

This policy brief warns about the risks of discontinuing the policy responses to the COVID-19 crisis by pursuing exit strategies too early and/or too sharply. It outlines a comprehensive strategy for limiting such risks globally and offers an in-depth discussion of the European situation. Due to...