Überarb. und durch Nachweise erg. Referate eines interdisziplinären Workshops des Exzellenzclusters "Religion und Politik in den Kulturen der Vormoderne und der Moderne" an der Westfäl. Wilhelms-Univ. Münster im Februar 2011

In this paper, we analyse nominal exchange rate and price dynamics after risk shocks with short-term interest rates constrained by the zero lower bound (ZLB). We show with a stylized theoretical model that temporary risk shocks may lead to permanent shifts of the exchange rate and the price...

How does the need to preserve government debt sustainability affect the optimal monetary and fiscal policy response to a liquidity trap? To provide an answer, we employ a small stochastic New Keynesian model with a zero bound on nominal interest rates and characterize optimal time-consistent...