Exchange-rate policy and the zero bound on nominal interest
- In this paper, we study the effectiveness of monetary policy in a severe recession and deflation when nominal interest rates are bounded at zero. We compare two alternative proposals for ameliorating the effect of the zero bound: an exchange-rate peg and price-level targeting. We conduct this quantitative comparison in an empirical macroeconometric model of Japan, the United States and the euro area. Furthermore, we use a stylized micro-founded two-country model to check our qualitative findings. We find that both proposals succeed in generating inflationary expectations and work almost equally well under full credibility of monetary policy. However, price-level targeting may be less effective under imperfect credibility, because the announced price-level target path is not directly observable. Klassifikation: E31, E52, E58, E61
| Verfasserangaben: | Günter Coenen, Volker WielandORCiDGND |
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| URN: | urn:nbn:de:hebis:30-10651 |
| Titel des übergeordneten Werkes (Deutsch): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2004,14 |
| Schriftenreihe (Bandnummer): | CFS working paper series (2004, 14) |
| Dokumentart: | Arbeitspapier |
| Sprache: | Englisch |
| Jahr der Fertigstellung: | 2004 |
| Jahr der Erstveröffentlichung: | 2004 |
| Veröffentlichende Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Datum der Freischaltung: | 13.06.2005 |
| Freies Schlagwort / Tag: | exchange rates; liquidity trap; monetary policy rules; nominal rigidities; rational expectations; zero-interest-rate bound |
| GND-Schlagwort: | Geldpolitik; Zerobond; Nominalzins; Rezession; Deflation |
| HeBIS-PPN: | 223972169 |
| Institute: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
| DDC-Klassifikation: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Lizenz (Deutsch): |  Deutsches Urheberrecht |
