Others Conservatism and Liquidity Traps

Nakata, Taisuke  ,  Schmidt, Sebastian

0772015-11 , UTokyo Price Project , Board of Governors of the Federal Reserve System, Division of Research and Statistics , European Central Bank, Monetary Policy Research Division
2012~2016年度科学研究費補助金[基盤研究(S)]「長期デフレの解明」(研究代表者 東京大学経済学研究科・渡辺努, 課題番号:24223003)
In an economy with an occasionally binding zero lower bound (ZLB) constraint, the anticipation of future ZLB episodes creates a tradeoff for discretionary central banks between inflation and output stabilization. As a consequence, inflation systematically falls below target even when the policy rate is above zero. Appointing Rogoff's (1985) conservative central banker mitigates this deflationary bias away from the ZLB and enhances welfare by improving allocations both at and away from the ZLB.


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