Low rates, zero lower bound and monetary policy black hole

Lei Lv and Zhi-Xin Liu

Applied Economics Letters, 2021, vol. 28, issue 13, 1114-1120

Abstract: This article provides an analytical characterization of the effects of supply shocks and demand shocks on the economy of long-term zero lower bound. We consider a tractable New Keynesian model with price stickiness and show that supply shocks will make the economy more tightening while demand shocks will make the economy more expansionary.

Date: 2021
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DOI: 10.1080/13504851.2020.1803475

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