Three Lessons for Monetary Policy in a Low-Inflation Era

David Reifschneider and John C Willams

Journal of Money, Credit and Banking, 2000, vol. 32, issue 4, 936-66

Abstract: The zero lower bound on nominal interest rates constrains the central bank's ability to stimulate the economy during downturns. We use the FRB/US model to quantify the effects of the zero bound on macroeconomic stabilization and to explore how policy can be designed to minimize these effects. During particularly severe contractions, open-market operations alone may be insufficient to restore equilibrium; some other stimulus is needed.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:32:y:2000:i:4:p:936-66

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