Understanding Benign Liquidity Traps: The Case of Japan

Homburg Stefan
Additional contact information
Homburg Stefan: Leibniz University Hannover,Hanover, Germany

German Economic Review, 2017, vol. 18, issue 3, 267-282

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: Liquidity trap; Japan; interest rate determination; monetary policy; quantitative easing; forward guidance; dynamic general equilibrium; secular stagnation (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/geer.12105 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Journal Article: Understanding Benign Liquidity Traps: The Case of Japan (2017)
Working Paper: Understanding Benign Liquidity Traps: The Case of Japan (2016)
Working Paper: Understanding Benign Liquidity Traps: The Case of Japan (2015)
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:bpj:germec:v:18:y:2017:i:3:p:267-282

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ger/html

DOI: 10.1111/geer.12105

Access Statistics for this article

German Economic Review is currently edited by Peter Egger, Almut Balleer, Jesus Crespo-Cuaresma, Mario Larch, Aderonke Osikominu and Georg Wamser

More articles in German Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().