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dc.contributor.authorEvans, George W.en_US
dc.contributor.authorGuse, Eranen_US
dc.contributor.authorHonkapohja, Seppoen_US
dc.date.accessioned2009-01-28T14:59:57Z-
dc.date.available2009-01-28T14:59:57Z-
dc.date.issued2007en_US
dc.identifier.urihttp://hdl.handle.net/10419/17857-
dc.description.abstractWe examine global economic dynamics under learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. Under normal monetary and fiscal policy, the intended steady state is locally but not globally stable. Large pessimistic shocks to expectations can lead to deflationary spirals with falling prices and falling output. To avoid this outcome we recommend augmenting normal policies with aggressive monetary and fiscal policy that guarantee a lower bound on inflation. In contrast, policies geared toward ensuring an output lower bound are insufficient for avoiding deflationary spirals.en_US
dc.language.isoengen_US
dc.publisherKiel Institute for the World Economy (IfW) Kielen_US
dc.relation.ispartofseriesKieler Arbeitspapiere 1341en_US
dc.subject.jelE58en_US
dc.subject.jelE52en_US
dc.subject.jelE63en_US
dc.subject.ddc330en_US
dc.subject.keywordAdaptive Learningen_US
dc.subject.keywordMonetary Policyen_US
dc.subject.keywordFiscal Policyen_US
dc.subject.keywordZero Interest Rate Lower Bounden_US
dc.subject.keywordIndeterminacyen_US
dc.titleLiquidity Traps, Learning and Stagnationen_US
dc.typeWorking Paperen_US
dc.identifier.ppn53487648Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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