TRANSMISSION MECHANISM OF THE FEDERAL RESERVE SYSTEM’S MONETARY POLICY IN THE CONDITIONS OF ZERO BOUND ON NOMINAL INTEREST RATES

Dominika Brozda ()
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Dominika Brozda: University of Lodz, Poland

Equilibrium. Quarterly Journal of Economics and Economic Policy, 2016, vol. 11, issue 4, 751-767

Abstract: The experience of Japan from the 90s of the twentieth century and the recent global financial crisis has shown that the zero lower bound problem has ceased to be a theoretical curiosity and became the subject of intense scientific discussion. This issue is closely linked with John Maynard Keynes’s liquidity trap. The phenomenon of the zero lower bound is very controversial. Not all economists agree that it may restrict the effectiveness of the central bank’s actions. The aim of the article is to present the views of economists on this transmission mechanism of monetary policy under the zero lower bound. The paper also attempts to evaluate the effectiveness of the Federal Reserve System’s monetary policy at zero nominal interest rates.

Keywords: monetary policy; interest rate; transmission mechanism of monetary policy; zero lower bounds (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pes:ierequ:v:11:y:2016:i:4:p:751-767

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