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dc.contributor.authorAdam, Klausen_US
dc.contributor.authorBilli, Roberto M.en_US
dc.date.accessioned2006-08-07en_US
dc.date.accessioned2009-07-24T13:47:11Z-
dc.date.available2009-07-24T13:47:11Z-
dc.date.issued2005en_US
dc.identifier.piurn:nbn:de:hebis:30-10925-
dc.identifier.urihttp://hdl.handle.net/10419/25419-
dc.description.abstractIgnoring the existence of the zero lower bound on nominal interest rates one considerably understates the value of monetary commitment in New Keynesian models. A stochastic forward-looking model with lower bound, calibrated to the U.S. economy, suggests that low values for the natural rate of interest lead to sizeable output losses and deflation under discretionary monetary policy. The fall in output and deflation are much larger than in the case with policy commitment and do not show up at all if the model abstracts from the existence of the lower bound. The welfare losses of discretionary policy increase even further when inflation is partly determined by lagged inflation in the Phillips curve. These results emerge because private sector expectations and the discretionary policy response to these expectations reinforce each other and cause the lower bound to be reached much earlier than under commitment.en_US
dc.language.isoengen_US
dc.publisherCenter for Financial Studies Frankfurt, Mainen_US
dc.relation.ispartofseriesCFS Working Paper 2005/16en_US
dc.subject.jelE31en_US
dc.subject.jelE52en_US
dc.subject.ddc330en_US
dc.subject.keywordNonlinear Optimal Policyen_US
dc.subject.keywordOccasionally Binding Constrainten_US
dc.subject.keywordSequential Policyen_US
dc.subject.keywordMarkov Perfect Equilibriumen_US
dc.subject.keywordLiquidity Trapen_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwDiskretionäre Politiken_US
dc.subject.stwPhillips-Kurveen_US
dc.subject.stwLiquiditätspräferenzen_US
dc.subject.stwZinspolitiken_US
dc.subject.stwTheorieen_US
dc.titleDiscretionary monetary policy and the zero lower bound on nominal interest ratesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn497885263en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.identifier.repecRePEc:zbw:cfswop:200516-
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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