Inside Money, Investment, and Unconventional Monetary Policy

Lukas Altermatt

No 470, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: I develop a new monetarist model to analyze why an economy can fall into a liquidity trap, and what the effects of unconventional monetary policy measures such as helicopter money and negative interest rates are under these circumstances. I find that liquidity traps can be caused by a decrease in the bonds-to-money ratio, by a decrease in productivity of capital, or by an increase in demand for consumption. The model shows that, while conventional monetary policy cannot control inflation in a liquidity trap, unconventional monetary policies allow the monetary authority to regain control over the inflation rate, and that an increase in the bonds-to-money ratio is the only welfare-improving policy.

Date: 2019
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2019/paper_470.pdf (application/pdf)

Related works:
Journal Article: INSIDE MONEY, INVESTMENT, AND UNCONVENTIONAL MONETARY POLICY (2022)
Working Paper: Inside money, investment, and unconventional monetary policy (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:470

Access Statistics for this paper

More papers in 2019 Meeting Papers from Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().