Research Discussion Papers, Bank of Finland
No 18/2015:
Monetary policies to counter the zero interest rate: an overview of research
Seppo Honkapohja ()
Abstract: Many central banks have lowered their interest rates close
to zero in response to the crisis since 2008. In standard monetary models
the zero lower bound (ZLB) constraint implies the existence of a second
steady state in addition to the inflation-targeting steady state. Large
scale asset purchases (APP) have been used as a tool for easing of monetary
policy in the ZLB regime. I provide a theoretical discussion of these
issues using a stylized general equilibrium model in a global nonlinear
setting. I also review briefly the empirical literature about effects of
APP’s.
Keywords: adaptive learning; monetary policy; inflation targeting; zero interest rate lower bound; (follow links to similar papers)
JEL-Codes: E52; E58; E63; (follow links to similar papers)
35 pages, August 20, 2015
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