Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57966 
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dc.contributor.authorCao, Jinen
dc.contributor.authorIlling, Gerharden
dc.date.accessioned2012-05-15-
dc.date.accessioned2012-05-21T10:07:02Z-
dc.date.available2012-05-21T10:07:02Z-
dc.date.issued2012-
dc.identifier.urihttp://hdl.handle.net/10419/57966-
dc.description.abstractThis paper provides a framework for modeling the risk-taking channel of monetary policy, the mechanism how financial intermediaries' incentives for liquidity transformation are affected by the central bank's reaction to financial crisis. Anticipating central bank's reaction to liquidity stress gives banks incentives to invest in excessive liquidity transformation, triggering an 'interest rate trap' - the economy will remain stuck in a long lasting period of sub-optimal, low interest rate equilibrium. We demonstrate that interest rate policy as financial stabilizer is dynamically inconsistent, and the constraint efficient outcome can be implemented by imposing ex ante liquidity requirements.en
dc.language.isoengen
dc.publisher|aCenter for Economic Studies and ifo Institute (CESifo) |cMunichen
dc.relation.ispartofseries|aCESifo Working Paper |x3794en
dc.subject.jelE50en
dc.subject.jelG21en
dc.subject.jelG28en
dc.subject.ddc330en
dc.subject.keywordinterest rate trapen
dc.subject.keywordrisk-taking channelen
dc.subject.keywordsystemic risken
dc.subject.keywordliquidity requirementsen
dc.subject.keywordmacroprudential regulationen
dc.title"Interest Rate Trap", or: Why does the central bank keep the policy rate too low for too long time?-
dc.typeWorking Paperen
dc.identifier.ppn715725645en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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