Australia and the Zero Lower Bound on Interest Rates: Some Monetary Policy Options
This paper argues that Australia needs a contingency plan for monetary policy when interest rates hit zero, and considers various options. Level targeting appears undesirable as a long-run policy due to the lack of an appropriate target variable - prices, wages and nominal GDP all being unsuitable - but may be useful as a temporary expedient. Other possibilities include a higher inflation target and temporary exchange rate targeting.
Volume (Year): 22 (2015)
Issue (Month): 1 ()
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