On real interest rates, tariff policy, exchange rates and the ZLB

Arbeitspapier

What could be the drivers of low real rates? What are the implications of the Zero Lower Bound for economic policy? To discuss these questions we introduce a full general equilibrium model of the world economy with a simple (2 period) intertemporal structure. The model is simple enough to allow for full analytical solution yet sufficiently complex to allow us to address the impact of anticipated future productivity slow down, aging, structural reform and fiscal policy on real interest rates if markets clear and on aggregate economic activity if they do not because of the ZLB. We extend both the equilibrium model and the ZLB variant to a more-goods-per-period set up with complete specialization to address (real) exchange rate policy and the macroeconomic impact of trade tariffs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. TI 2018-032/VI

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Trade Policy; International Trade Organizations ; Macroeconomic Aspects of International Trade and Finance: General ; Open Economy Macroeconomics ; Fiscal Policies and Behavior of Economic Agents: General
• Subject: equilibrium real interest rates ; aging ; productivity change ; the ZLB ; real exchange rates ; import tariffs

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): van Wijnbergen, Sweder
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/177722
• Last update: 10.03.2025, 11:42 AM CET