Export shocks and the zero bound trap

Ippei Fujiwara

No 63, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: When a small open economy experiences a sufficiently large negative export shock, it is vulnerable to falling into a zero bound trap. In addition, such a shock can have very large impact on the economy compared to the case when the zero bound is not a binding constraint. This could be one possible explanation as to why a country like Japan experienced much larger drop in output than the United States during the recent financial crisis.

Keywords: Monetary policy; Banks and banking, Central; Global financial crisis; Interest rates; Japan (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cba and nep-mon
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Citations: View citations in EconPapers (2)

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