Details
| Original language | English |
|---|---|
| Pages (from-to) | 267-282 |
| Number of pages | 16 |
| Journal | German economic review |
| Volume | 18 |
| Issue number | 3 |
| Publication status | Published - 1 Aug 2017 |
Abstract
Japan has been in a benign liquidity trap since the 1990s. In a benign liquidity trap, interest rates approach zero and monetary policy is ineffective but output and employment perform decently. Such a pattern contradicts traditional macro theories. This paper introduces a monetary general equilibrium model that is compatible with Japan's performance and resolves puzzles associated with liquidity traps. Possible conclusions for Anglo-Saxon countries and eurozone members are also discussed.
Keywords
- dynamic general equilibrium, forward guidance, interest rate determination, Japan, Liquidity trap, monetary policy, quantitative easing, secular stagnation
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: German economic review, Vol. 18, No. 3, 01.08.2017, p. 267-282.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Understanding Benign Liquidity Traps
T2 - The Case of Japan
AU - Homburg, Stefan
PY - 2017/8/1
Y1 - 2017/8/1
N2 - Japan has been in a benign liquidity trap since the 1990s. In a benign liquidity trap, interest rates approach zero and monetary policy is ineffective but output and employment perform decently. Such a pattern contradicts traditional macro theories. This paper introduces a monetary general equilibrium model that is compatible with Japan's performance and resolves puzzles associated with liquidity traps. Possible conclusions for Anglo-Saxon countries and eurozone members are also discussed.
AB - Japan has been in a benign liquidity trap since the 1990s. In a benign liquidity trap, interest rates approach zero and monetary policy is ineffective but output and employment perform decently. Such a pattern contradicts traditional macro theories. This paper introduces a monetary general equilibrium model that is compatible with Japan's performance and resolves puzzles associated with liquidity traps. Possible conclusions for Anglo-Saxon countries and eurozone members are also discussed.
KW - dynamic general equilibrium
KW - forward guidance
KW - interest rate determination
KW - Japan
KW - Liquidity trap
KW - monetary policy
KW - quantitative easing
KW - secular stagnation
UR - http://www.scopus.com/inward/record.url?scp=84971299739&partnerID=8YFLogxK
U2 - 10.1111/geer.12105
DO - 10.1111/geer.12105
M3 - Article
AN - SCOPUS:84971299739
VL - 18
SP - 267
EP - 282
JO - German economic review
JF - German economic review
SN - 1465-6485
IS - 3
ER -