Monetary Policy after Bubbles Burst: The Zero Lower Bound, the Liquidity Trap and the Credit Deadlock
The current widespread use of models of monetary policy that link expenditure to interest rates, while by-passing interaction of the supply and demand for money in the transmission mechanism, fails to illuminate several important policy issues, and is beginning to create a professional "memory loss" in some of these areas. This claim is illustrated with reference to recent discussions of the conduct of monetary policy in the wake of financial crises, particularly when short interest rates are close to zero, as they have recently been in Japan.
Volume (Year): 30 (2004)
Issue (Month): 3 (September)
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