Conservatism and liquidity traps

Sebastian Schmidt and Taisuke Nakata

No 1816, Working Paper Series from European Central Bank

Abstract: In an economy with an occasionally binding zero lower bound (ZLB) constraint, the anticipation of future ZLB episodes creates a trade-off for discretionary central banks between inflation and output stabilization. As a consequence, inflation systematically falls below target even when the policy rate is above zero. Appointing Rogoff JEL Classification: E52, E61

Keywords: Deflationary Bias; Inflation Conservatism; inflation targeting; Liquidity Traps; zero lower bound (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: 2179645
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Conservatism and liquidity traps (2019)
Working Paper: Conservatism and Liquidity Traps (2015)
Working Paper: Conservatism and Liquidity Traps (2015)
Working Paper: Conservatism and Liquidity Traps (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20151816

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