Nakata, Taisuke
Expectations-driven liquidity traps implications for monetary and fiscal policy / by Taisuke Nakata and Sebastian Schmidt
Resumen
Bibliografía
We study optimal time-consistent monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence give rise to persistent liquidity trap episodes. Insights from widely studied fundamental-driven liquidity traps are not a useful guide for enhancing welfare in this model. Raising the inflation target, appointing an inflation-conservative central banker, or allowing for the use of government spending as an additional stabilization tool can exacerbate deflationary pressures and demand deficiencies during the liquidity trap episodes. However, appointing a policy-maker who is sufficiently less concerned with government spending stabilization than society eliminates expectations-driven liquidity traps.
POLITICA MONETARIA
POLITICA FISCAL
PENSAMIENTO ECONOMICO
MICROECONOMIA
LIQUIDEZ
INFLACION
GASTO PUBLICO
ESTADOS UNIDOS
Schmidt, Sebastian
American Economic Journal : Macroeconomics 1945-7707 v. 14, n. 4, October 2022, p. 68-103
Expectations-driven liquidity traps implications for monetary and fiscal policy / by Taisuke Nakata and Sebastian Schmidt
Resumen
Bibliografía
We study optimal time-consistent monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence give rise to persistent liquidity trap episodes. Insights from widely studied fundamental-driven liquidity traps are not a useful guide for enhancing welfare in this model. Raising the inflation target, appointing an inflation-conservative central banker, or allowing for the use of government spending as an additional stabilization tool can exacerbate deflationary pressures and demand deficiencies during the liquidity trap episodes. However, appointing a policy-maker who is sufficiently less concerned with government spending stabilization than society eliminates expectations-driven liquidity traps.
POLITICA MONETARIA
POLITICA FISCAL
PENSAMIENTO ECONOMICO
MICROECONOMIA
LIQUIDEZ
INFLACION
GASTO PUBLICO
ESTADOS UNIDOS
Schmidt, Sebastian
American Economic Journal : Macroeconomics 1945-7707 v. 14, n. 4, October 2022, p. 68-103