Nonlinear adventures at the zero lower bound

Jesus Fernandez-Villaverde, Grey Gordon, Pablo Guerron and Juan F Rubio-Ramirez

Journal of Economic Dynamics and Control, 2015, vol. 57, issue C, 182-204

Abstract: In this paper, we argue for the importance of explicitly considering nonlinearities in analyzing the behavior of the New Keynesian model with a zero lower bound (ZLB) of the nominal interest rate. To show this, we report how the decision rules and the equilibrium dynamics of the model are substantially affected by the nonlinear features brought about by the ZLB. We also illustrate a tension between the length of a spell at the ZLB and the drop in consumption there.

Keywords: Zero lower bound; New Keynesian models; Nonlinear solution methods (search for similar items in EconPapers)
JEL-codes: E30 E50 E60 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (190)

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Related works:
Working Paper: Nonlinear Adventures at the Zero Lower Bound (2012)
Working Paper: Nonlinear adventures at the zero lower bound (2012)
Working Paper: Nonlinear Adventures at the Zero Lower Bound (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:57:y:2015:i:c:p:182-204

DOI: 10.1016/j.jedc.2015.05.014

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