The Neo-Fisherianism to Escape Zero Lower Bound

Siddhartha Chattopadhyay

MPRA Paper from University Library of Munich, Germany

Abstract: Sufficiently persistent rise in nominal interest increases inflation rate in short-run. This short-run comovement of nominal interest rate and inflation rate is known as Neo-Fisherianism. This paper proposes a policy based on Neo-Fisherianism to escape Zero Lower Bound (ZLB) using a textbook forward looking New Keynesian model. I have shown that proposed policy with properly chosen inflation target and persistence can stimulate economy and escape ZLB by raising nominal interest rate. I have also shown that the proposed policy is robust to varying degrees of price stickiness.

Keywords: New Keynesian Model; Neo-Fisherianism; Zero Lower Bound (search for similar items in EconPapers)
JEL-codes: E31 E4 E43 E5 E52 E6 E63 (search for similar items in EconPapers)
Date: 2019-02-20
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Related works:
Chapter: The Neo-Fisherianism to Escape Zero Lower Bound (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:92669

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