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Eliminating a deflationary trap through superinertial interest rate rules

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  • Sugo, Tomohiro
  • Ueda, Kozo

Abstract

This paper demonstrates that, even in the presence of a zero lower bound on nominal interest rates, central banks can eliminate a deflationary trap by the conduct of interest rate rules that have superinertia.

Suggested Citation

  • Sugo, Tomohiro & Ueda, Kozo, 2008. "Eliminating a deflationary trap through superinertial interest rate rules," Economics Letters, Elsevier, vol. 100(1), pages 119-122, July.
  • Handle: RePEc:eee:ecolet:v:100:y:2008:i:1:p:119-122
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    References listed on IDEAS

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    1. Schmitt-Grohe, Stephanie & Uribe, Martin, 2000. "Price level determinacy and monetary policy under a balanced-budget requirement," Journal of Monetary Economics, Elsevier, vol. 45(1), pages 211-246, February.
    2. Gauti B. Eggertsson & Michael Woodford, 2003. "Optimal Monetary Policy in a Liquidity Trap," NBER Working Papers 9968, National Bureau of Economic Research, Inc.
    3. Benhabib, Jess & Schmitt-Grohe, Stephanie & Uribe, Martin, 2001. "The Perils of Taylor Rules," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 40-69, January.
    4. Alstadheim Ragna & Henderson Dale W., 2006. "Price-Level Determinacy, Lower Bounds on the Nominal Interest Rate, and Liquidity Traps," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-27, November.
    5. Reifschneider, David & Willams, John C, 2000. "Three Lessons for Monetary Policy in a Low-Inflation Era," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 936-966, November.
    6. Jung, Taehun & Teranishi, Yuki & Watanabe, Tsutomu, 2005. "Optimal Monetary Policy at the Zero-Interest-Rate Bound," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(5), pages 813-835, October.
    7. Jess Benhabib & Stephanie Schmitt-Grohe & Martin Uribe, 2002. "Avoiding Liquidity Traps," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 535-563, June.
    8. David L. Reifschneider & John C. Williams, 2000. "Three lessons for monetary policy in a low-inflation era," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, pages 936-978.
    9. Sveen, Tommy & Weinke, Lutz, 2005. "New perspectives on capital, sticky prices, and the Taylor principle," Journal of Economic Theory, Elsevier, vol. 123(1), pages 21-39, July.
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    Cited by:

    1. Schmidt, Sebastian, 2016. "Lack of confidence, the zero lower bound, and the virtue of fiscal rules," Journal of Economic Dynamics and Control, Elsevier, vol. 70(C), pages 36-53.
    2. Fujiwara, Ippei & Nakazono, Yoshiyuki & Ueda, Kozo, 2015. "Policy regime change against chronic deflation? Policy option under a long-term liquidity trap," Journal of the Japanese and International Economies, Elsevier, vol. 37(C), pages 59-81.
    3. Ippei Fujiwara & Yoshiyuki Nakazono & Kozo Ueda, 2015. "Policy Regime Change Against Chronic Deflation?," Working Papers halshs-01545830, HAL.

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