Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/275675 
Year of Publication: 
2023
Series/Report no.: 
Deutsche Bundesbank Discussion Paper No. 22/2023
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
We examine how private sector agents might learn a new monetary strategy that is adopted while at the ELB. Little can be discovered until the economy improves enough that rates would be near liftoff under the old strategy. Recessionary shocks would thus delay learning while large inflationary shocks could outright stop it and so inhibit the ability of the new strategy to address future ELB episodes. The central bank can offset some of the inflation-induced learning loss by deviating from its new strategy, but this decision comes at the cost of higher near-term inflation and greater uncertainty about monetary policy.
Subjects: 
New framework
central bank's communications
deflationary bias
asymmetric average inflation targeting
imperfect credibility
liftoff
Bayesian learning
JEL: 
E52
C63
E31
ISBN: 
978-3-95729-953-6
Document Type: 
Working Paper

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