Zero lower bound (ZLB) economics: The fallacy of New Keynesian explanations of stagnation

Arbeitspapier

This paper explores zero lower bound (ZLB) economics. The ZLB is widely invoked to explain stagnation and it fits with the long tradition that argues Keynesian economics is a special case based on nominal rigidities. The ZLB represents the newest rigidity. Contrary to ZLB economics, not only does a laissez-faire monetary economy lack a mechanism for delivering the natural rate of interest, it may also lack such an interest rate. Moreover, the ZLB can be a stabilizing rigidity that prevents negative nominal interest rates exacerbating excess supply conditions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMK Working Paper ; No. 164

Classification and Topics

• Classification: Wirtschaft ; General Aggregative Models: General ; General Aggregative Models: Keynes; Keynesian; Post-Keynesian ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data) ; Money and Interest Rates: General ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General
• Subject: zero lower bound (ZLB) ; stagnation ; New Keynesianism ; nominal rigidities

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Palley, Thomas I.
• Event: Veröffentlichung
• (who): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (where): Düsseldorf
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/144921
• URN: urn:nbn:de:101:1-20160613703
• Last update: 10.03.2025, 11:43 AM CET