Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/142221 
Year of Publication: 
2016
Series/Report no.: 
Kiel Working Paper No. 2042
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
This paper studies the effects of protectionism as a business cycle instrument. In normal times, protectionism reduces international trade, distorts production and reduces output. However, in a liquidity trap protectionism lowers the real interest rate because inflation goes up while the nominal interest rate is stuck at the zero lower bound. This stimulates consumption and output.
Subjects: 
Business cycle policy
Protectionism
Liquidity trap
JEL: 
E12
E60
F13
Document Type: 
Working Paper

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