Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121776
Authors: 
Homburg, Stefan
Year of Publication: 
2015
Series/Report no.: 
Discussion Paper, Wirtschaftswissenschaftliche Fakultät, Leibniz University of Hannover 557
Abstract: 
Japan has been in a benign liquidity trap since 1990. In a benign liquidity trap, interest rates approach zero, prices decline, and monetary policy is ineffective but output and employment perform decently. Such a pattern contradicts traditional macro theories. This paper introduces a monetary general equilibrium model that is compatible with Japan's performance and resolves puzzles associated with liquidity traps. Possible conclusions for Anglo-Saxon countries and eurozone members are also discussed.
Subjects: 
liquidity trap
Japan
interest rate determination
monetary policy
quantitative easing
forward guidance
dynamic general equilibrium
secular stagnation
JEL: 
E31
E43
E52
Document Type: 
Working Paper

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