Amplification of shocks at the zero lower bound in a small open and large closed economy

Michal Brzoza-Brzezina

Applied Economics Letters, 2016, vol. 23, issue 14, 1029-1033

Abstract: This letter compares the consequences of hitting the zero lower bound in small open and large closed economies. I show that in a large economy shocks are modified by the zero lower bound on interest rate much more than in a small one -- as a result, the large economy may suffer more.

Date: 2016
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DOI: 10.1080/13504851.2015.1130213

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