Monetary Policy under a Liquidity Trap: Simulation Evidence for the Euro Area

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 . (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

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Abstract

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.

Item Type: Article
Uncontrolled keywords: zero interest bound; Taylor rule; euro area
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: G.F. Green
Date Deposited: 05 Sep 2008 11:45
Last Modified: 14 Jan 2010 14:35
Resource URI: https://kar.kent.ac.uk/id/eprint/9422 (The current URI for this page, for reference purposes)
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