Arbeitspapier
Zero Lower Bound on Inflation Expectations
We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in environments where persistent deflation is a strong possibil- ity. This fact stands in contrast to the standard macroeconomic models with rational expectations. We extend a standard New Keynesian model with a zero-lower bound on inflation expectations. Unconventional monetary policies, such as forward guid- ance, are weaker. In liquidity traps, the government spending output multiplier is finite, and adverse aggregate supply shocks are not expansionary. The possibility of confidence-driven liquidity traps is attenuated.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 14853
- Classification
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Wirtschaft
- Subject
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inflation expectations
non-rational beliefs
survey data
- Event
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Geistige Schöpfung
- (who)
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Gorodnichenko, Yuriy
Sergeyev, Dmitriy
- Event
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Veröffentlichung
- (who)
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Institute of Labor Economics (IZA)
- (where)
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Bonn
- (when)
-
2021
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Gorodnichenko, Yuriy
- Sergeyev, Dmitriy
- Institute of Labor Economics (IZA)
Time of origin
- 2021
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