The redistributive effects of forward guidance

Seungjun Baek

Economics Letters, 2019, vol. 182, issue C, 118-121

Abstract: We examine the redistributive effects of forward guidance under the zero lower bound. We show that the effects of forward guidance depend on savers’ asset positions and the nature of financial frictions. If borrowers are constrained on the issuance of new debt, savers’ wealth is exposed to future inflation and real interest rates. In some cases, a negative wealth effect is strong in that forward guidance cannot mitigate recession.

Keywords: Monetary policy; Forward guidance; Zero lower bound; Redistribution; Financial friction (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:182:y:2019:i:c:p:118-121

DOI: 10.1016/j.econlet.2019.06.008

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