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Amplification of shocks at the zero lower bound in a small open and large closed economy

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  • Michał Brzoza-Brzezina

Abstract

This letter compares the consequences of hitting the zero lower bound in small open and large closed economies. I show that in a large economy shocks are modified by the zero lower bound on interest rate much more than in a small one -- as a result, the large economy may suffer more.

Suggested Citation

  • Michał Brzoza-Brzezina, 2016. "Amplification of shocks at the zero lower bound in a small open and large closed economy," Applied Economics Letters, Taylor & Francis Journals, vol. 23(14), pages 1029-1033, September.
  • Handle: RePEc:taf:apeclt:v:23:y:2016:i:14:p:1029-1033
    DOI: 10.1080/13504851.2015.1130213
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    1. Michal Brzoza-Brzezina & Marcin Kolasa & Mateusz Szetela, 2016. "Is Poland at risk of the zero lower bound?," Bank i Kredyt, Narodowy Bank Polski, vol. 47(3), pages 195-226.

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    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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