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positive at the onset of the episode, through promising higher inflation rates in future periods. We embed our theory into a …
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cornerstone of modern macroeconomic theory. …
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We examine the effects of various borrower-based macroprudential tools in a New Keynesian environment where both real and nominal interest rates are low. Our model features long-term debt, housing transaction costs and a zero-lower bound constraint on policy rates. We find that the long-term...
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