Liquidity Traps in a World Economy
| Autor: | Kollmann, Robert |
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| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: | |
| Zdroj: | ECARES Working Papers; 2021-02 |
| Popis: | This paper studies a New Keynesian model of a two-country world with a zero lower bound (ZLB) constraint for nominal interest rates. A floating exchange rate regime is assumed. The presence of the ZLB generates multiple equilibria. The two countries can experience recurrent liquidity traps induced by the self-fulfilling expectation that future inflation will be low. These "expectations-driven" liquidity traps can be synchronized or unsynchronized across countries. In an expectations-driven liquidity trap, the domestic and international transmission of persistent shocks to productivity and government purchases differs markedly from shock transmission in a "fundamentals-driven" liquidity trap. info:eu-repo/semantics/published |
| Databáze: | OpenAIRE |
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