OPTIMAL MONETARY POLICY AND IMPERFECT FINANCIAL MARKETS: A CASE FOR NEGATIVE NOMINAL INTEREST RATES?
This article studies optimal monetary policy in a model with credit frictions and money demand. We show that augmenting a standard New Keynesian model with money demand and financial frictions generates a mechanism that, in equilibrium, gives rise to optimal negative nominal interest rates. In addit...
| Publicado en: | Economic Inquiry Vol. 54; no. 1; pp. 215 - 229 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Jan2016
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=111238798&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 111238798 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Jan2016 vid: 54 iid: 1 pid: 480 pub: Wiley-Blackwell artinfo: ui: 111238798 10.1111/ecin.12244 ppf: 215 ppct: 14 formats: fmt: – @attributes: type: T – @attributes: type: P size: 220KB tig: atl: OPTIMAL MONETARY POLICY AND IMPERFECT FINANCIAL MARKETS: A CASE FOR NEGATIVE NOMINAL INTEREST RATES? aug: au: Abo‐Zaid, Salem Garín, Julio affil: Assistant Professor, Department of Economics, Texas Tech University, Lubbock TX, 79409 Assistant Professor, Department of Economics, University of Georgia, Athens GA, 30602 su: Keynesian economics Monetary policy Credit management Interest rates Capital market sug: subj: Keynesian economics Other Activities Related to Credit Intermediation Monetary policy Credit management Interest rates Capital market ab: This article studies optimal monetary policy in a model with credit frictions and money demand. We show that augmenting a standard New Keynesian model with money demand and financial frictions generates a mechanism that, in equilibrium, gives rise to optimal negative nominal interest rates. In addition, we find that the tighter credit markets are, the lower the optimal nominal policy interest rate and the more likely it is to be negative. Quantitatively, when credit constraints are binding, a standard calibration of the model generates an optimal nominal policy interest rate that is roughly −4% annually. ( JEL E31, E41, E43, E44, E52, E58) pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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