Global effective lower bound and unconventional monetary policy

Wu, Jing Cynthia; Zhang, Ji

Global effective lower bound and unconventional monetary policy

Journal of International Economics, 2019, vol. 118, issue C, 200-216

Abstract: In a standard open-economy New Keynesian model, the effective lower bound causes anomalies: output and terms of trade respond to a supply shock in the opposite direction compared to normal times. We introduce a tractable framework to accommodate for unconventional monetary policy. In our model, these anomalies disappear. We allow unconventional policy to be partially active and asymmetric between countries. Empirically, we find the US, Euro area, and UK have implemented a considerable amount of unconventional monetary policy: the US follows the historical Taylor rule, whereas the others have done less compared to normal times.

Keywords: Effective lower bound; Unconventional monetary policy; Shadow rate; New Keynesian model; Open economy (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Global Effective Lower Bound and Unconventional Monetary Policy (2019)
Chapter: Global Effective Lower Bound and Unconventional Monetary Policy (2018)
Working Paper: Global Effective Lower Bound and Unconventional Monetary Policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:118:y:2019:i:c:p:200-216

DOI: 10.1016/j.jinteco.2019.01.016

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