MARC Record from Library of Congress

LEADER: 02316cam a22003137a 4500
001 2005301032
003 DLC
005 20051230140637.0
007 cr |||||||||||
008 051230s2005 mou sb f000 0 eng
010 $a 2005301032
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aAdam, Klaus,$d1971-
245 10 $aDiscretionary monetary policy and the zero lower bound on nominal interest rates$h[electronic resource] /$cKlaus Adam and Roberto M. Billi.
260 $aKansas City [Mo.] :$bResearch Division, Federal Reserve Bank of Kansas City,$c[2005]
490 1 $aRWP ;$v05-08
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file (viewed on Dec. 30, 2005).
500 $a"November 2005."
530 $aAlso available in print.
520 3 $a"Ignoring the existence of the zero bound on nominal interest rates one considerably understates the value of monetary commitment in New Keynesian models. A stochastic forward-looking model with an occasionally binding lower bound, calibrated to the U.S. economy, suggests that low values for the natural rate of interest lead to sizeable output losses and deflation under discretionary monetary policy. The fall in output and deflation are much larger than in the case with policy commitment and do not show up at all if the model abstracts from the existence of the lower bound. The welfare losses of discretionary policy increase even further when inflation is partly determined by lagged inflation in the Phillips curve. These results emerge because private sector expectations and the discretionary policy response to these expectations reinforce each other and cause the lower bound to be reached much earlier than under commitment."
504 $aIncludes bibliographical references.
653 $aNonlinear optimal policy ;$aOccasionally binding constraint ;$aSequential policy ;$aMarkov perfect equilibrium ;$aLiquidity trap
700 1 $aBilli, Roberto M.$q(Roberto Mario),$d1968-
710 2 $aFederal Reserve Bank of Kansas City.$bResearch Division.
830 0 $aResearch working paper (Federal Reserve Bank of Kansas City : Online) ;$v05-08.
856 42 $3Abstract page with link to full-text PDF report$uhttp://www.kc.frb.org/PUBLICAT/RESWKPAP/RWP05-08.htm