Arbeitspapier
The hockey stick Phillips curve and the zero lower bound
The recently observed disconnect between inflation and economic activity can be explained by the interplay between the zero lower bound (ZLB) and the costs of external financing. In normal times, credit spreads and the nominal interest rate balance out; factor costs dominate firms' marginal costs. When nominal rates are constrained, larger spreads can more than offset the effect of lower factor costs and induce only moderate inflation responses. The Phillips curve is hence flat at the ZLB, but features a positive slope in normal times and thus a hockey stick shape. Via this mechanism, forward guidance may induce deflationary effects.
- Sprache
-
Englisch
- Erschienen in
-
Series: IMFS Working Paper Series ; No. 153
- Klassifikation
-
Wirtschaft
Existence and Stability Conditions of Equilibrium
Computational Techniques; Simulation Modeling
Price Level; Inflation; Deflation
Business Fluctuations; Cycles
Financial Markets and the Macroeconomy
Monetary Policy
Central Banks and Their Policies
Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- Thema
-
Phillips Curve
Financial Frictions
Zero Lower Bound
Disinflation
Forward Guidance
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Böhl, Gregor
Lieberknecht, Philipp
- Ereignis
-
Veröffentlichung
- (wer)
-
Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2021
- Handle
- URN
-
urn:nbn:de:hebis:30:3-564508
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
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Objekttyp
- Arbeitspapier
Beteiligte
- Böhl, Gregor
- Lieberknecht, Philipp
- Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)
Entstanden
- 2021
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