Dieppe, A. and McAdam, Peter (2006) Monetary Policy under a Liquidity Trap: Simulation Evidence for the Euro Area. Journal of the Japanese and International Economies, 20 (3). pp. 338-363. ISSN 0889-1583 .
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In this paper, we analyze the conduct of monetary policy under a zero nominal interest-rate bound (hereafter ZIB) in a model economy of the euro area, namely that of the Area Wide Model. The aggregate euro-area economy is modeled to have relatively sluggish adjustment properties and a private sector with mainly backward-looking expectations. For a given ZIB benchmark, we consider variations in the monetary-policy reaction function to minimize the macro-economic consequences of such a deflationary regime. We rank the effectiveness of these remedial policies using a number of metrics and relate our results to features and properties of the model economy.
|Uncontrolled keywords:||zero interest bound; Taylor rule; euro area|
|Subjects:||H Social Sciences|
|Divisions:||Faculties > Social Sciences > School of Economics|
|Depositing User:||Francis Green|
|Date Deposited:||05 Sep 2008 11:45|
|Last Modified:||14 Jan 2010 14:35|
|Resource URI:||http://kar.kent.ac.uk/id/eprint/9422 (The current URI for this page, for reference purposes)|
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