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The redistributive effects of forward guidance

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  • Baek, Seungjun

Abstract

We examine the redistributive effects of forward guidance under the zero lower bound. We show that the effects of forward guidance depend on savers’ asset positions and the nature of financial frictions. If borrowers are constrained on the issuance of new debt, savers’ wealth is exposed to future inflation and real interest rates. In some cases, a negative wealth effect is strong in that forward guidance cannot mitigate recession.

Suggested Citation

  • Baek, Seungjun, 2019. "The redistributive effects of forward guidance," Economics Letters, Elsevier, vol. 182(C), pages 118-121.
    • Handle: RePEc:eee:ecolet:v:182:y:2019:i:c:p:118-121
    DOI: 10.1016/j.econlet.2019.06.008
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