THE LIQUIDITY TRAP AND PERSISTENT UNEMPLOYMENT WITH DYNAMIC OPTIMIZING AGENTS: EMPIRICAL EVIDENCE

Yoshiyasu Ono, Kazuo Ogawa and Atsushi Yoshida

The Japanese Economic Review, 2004, vol. 55, issue 4, 355-371

Abstract: Standard money‐in‐utility dynamic models assume satiable liquidity preference, and thereby prove the existence of a full‐employment steady state. In the same framework, it is known that under insatiable liquidity or wealth preference there is a case where a full‐employment steady state does not exist. A liquidity trap then arises and unemployment persists in the steady state. Using both parametric and non‐parametric methods, this paper empirically finds that insatiable liquidity/wealth preference is better supported. Thus, without assuming any permanent distortion, we can analyse an effective demand shortage in a dynamic optimization framework.

Date: 2004
References: View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
https://doi.org/10.1111/j.1468-5876.2004.00315.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jecrev:v:55:y:2004:i:4:p:355-371

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1352-4739

Access Statistics for this article

The Japanese Economic Review is currently edited by Akira Okada

More articles in The Japanese Economic Review from Japanese Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery (contentdelivery@wiley.com).