Optimal Rules for Central Bank Interest Rates Subject to Zero Lower Bound
Abstract: The celebrated Taylor rule provides a simple formula that aims to capture how the central bank interest rate is adjusted as a linear function of inflation and output gap. However, the rule does not take explicitly into account the zero lower bound on the interest rate. Prior studies on interest rate selection subject to the zero lower bound have not produced derivations of explicit formulas. In this work, Taylor-like rules for central bank interest rates bounded below by zero are derived rigorously using a multi-parametric model predictive control framework. This framework is used to derive rules with or without inertia. The proposed approach is illustrated through simulations. Application of the approach to US economy data demonstrates its relevance and provides insight into the objectives underlying central bank interest rate decisions. A number of issues for future study are proposed.
- Standort
-
Deutsche Nationalbibliothek Frankfurt am Main
- Umfang
-
Online-Ressource
- Sprache
-
Englisch
- Erschienen in
-
Optimal Rules for Central Bank Interest Rates Subject to Zero Lower Bound ; volume:8 ; number:1 ; year:2014 ; extent:69
Economics / Journal articles. Journal articles ; 8, Heft 1 (2014) (gesamt 69)
- Urheber
-
Singh, Ajay Pratap
Nikolaou, Michael
- DOI
-
10.5018/economics-ejournal.ja.2014-37
- URN
-
urn:nbn:de:101:1-2412130939106.172074829783
- Rechteinformation
-
Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
- Letzte Aktualisierung
-
15.08.2025, 07:37 MESZ
Datenpartner
Deutsche Nationalbibliothek. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Beteiligte
- Singh, Ajay Pratap
- Nikolaou, Michael
Ähnliche Objekte (12)
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Determinacy and E-stability with interest rate rules at the zero lower bound
Estimating monetary policy rules when the zero lower bound on nominal interest rates is approached
Estimating monetary policy rules when the zero lower bound on nominal interest rates is approached
Fiscal activism and the zero nominal interest rate bound
Counter-cyclical fiscal rules and the zero lower bound
Exchange-rate policy and the zero bound on nominal interest
Fiscal Policy, Interest Rate Spreads, and the Zero Lower Bound
Exchange-rate policy and the zero bound on nominal interest
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Determinacy and E-stability with interest rate rules at the zero lower bound
Estimating monetary policy rules when the zero lower bound on nominal interest rates is approached
Estimating monetary policy rules when the zero lower bound on nominal interest rates is approached
Fiscal activism and the zero nominal interest rate bound
Counter-cyclical fiscal rules and the zero lower bound
Exchange-rate policy and the zero bound on nominal interest
Fiscal Policy, Interest Rate Spreads, and the Zero Lower Bound
Exchange-rate policy and the zero bound on nominal interest
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Optimal rules for central bank interest rates subject to zero lower bound
Determinacy and E-stability with interest rate rules at the zero lower bound
Estimating monetary policy rules when the zero lower bound on nominal interest rates is approached
Estimating monetary policy rules when the zero lower bound on nominal interest rates is approached
Fiscal activism and the zero nominal interest rate bound
Counter-cyclical fiscal rules and the zero lower bound
Exchange-rate policy and the zero bound on nominal interest
Fiscal Policy, Interest Rate Spreads, and the Zero Lower Bound