Arbeitspapier
Exchange-rate policy and the zero bound on nominal interest rates
In this paper, we study the effectiveness of monetary policy in a severe recession and de?ation when nominal interest rates are bounded at zero. We compare two alternative proposals for ameliorating the effect of the zero bound: an exchange-rate peg and price-level targeting. We conduct this quantitative comparison in an empirical macroeconometric model of Japan, the United States and the euro area. Furthermore, we use a stylized micro-founded two-country model to check our qualitative ?ndings. We ?nd that both proposals succeed in generating in?ationary expectations and work almost equally well under full credibility of monetary policy. However, price-level targeting may be less effective under imperfect credibility, because the announced price-level target path is not directly observable.
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 350
- Klassifikation
-
Wirtschaft
Price Level; Inflation; Deflation
Monetary Policy
Central Banks and Their Policies
Policy Objectives; Policy Designs and Consistency; Policy Coordination
- Thema
-
Exchange Rates
liquidity trap
monetary policy rules
nominal rigidities
Zero-interest-rate bound
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Coenen, Günter
Wieland, Volker
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2004
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Coenen, Günter
- Wieland, Volker
- European Central Bank (ECB)
Entstanden
- 2004
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