Understanding persistent ZLB: Theory and assessment

Arbeitspapier

Concerns of prolonged stagnation periods with near-zero interest rates and deflation have become widespread in many advanced economies. We build a theoretical framework that rationalizes two theories of low interest rates: expectations-trap and secular stagnation in a unified setting. We analytically derive contrasting policy implications under each hypothesis and identify robust policies that eliminate expectations-trap and reduce the severity of secular stagnation episodes. We provide a quantitative assessment of the Japanese experience from 1998:Q1-2020:Q4. We find evidence favoring the expectations-trap hypothesis and show that equilibrium indeterminacy is essential to distinguish between theories of low interest rates in the data.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 346

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Monetary Policy
• Thema: Expectations-driven trap ; secular stagnation ; zero lower bound ; robust policies

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Cuba-Borda, Pablo ; Singh, Sanjay R.
• Ereignis: Veröffentlichung
• (wer): University of California, Department of Economics
• (wo): Davis, CA
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/267010
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ