The Stochastic Lower Bound

Riccardo M. Masolo; Riccardo Maria Masolo; Pablo E. Winant

doi:10.1016/j.econlet.2019.03.026

The Stochastic Lower Bound

Riccardo M. Masolo^*, Riccardo Maria Masolo^*, Pablo E. Winant

^*Autore corrispondente per questo lavoro

Risultato della ricerca: Contributo in rivista › Articolo in rivista

Abstract

Since the Great Recession policy rates have been extremely low, but neither absolutely constant, nor exactly set to zero. We thus augment a standard Zero Lower Bound (ZLB) model to study the effects of a Stochastic Lower Bound (SLB) on policy rates. We find that a less predictable SLB reduces the deflationary effects of negative demand shocks by lowering expectations of future values of the SLB at times when interest-rate cuts are not an option.

Lingua originale	English
pagine (da-a)	54-57
Numero di pagine	4
Rivista	Economics Letters
Volume	180
DOI	https://doi.org/10.1016/j.econlet.2019.03.026
Stato di pubblicazione	Pubblicato - 2019

Keywords

DSGE
Inflation
ZLB

Accesso al documento

10.1016/j.econlet.2019.03.026

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title = "The Stochastic Lower Bound",

abstract = "Since the Great Recession policy rates have been extremely low, but neither absolutely constant, nor exactly set to zero. We thus augment a standard Zero Lower Bound (ZLB) model to study the effects of a Stochastic Lower Bound (SLB) on policy rates. We find that a less predictable SLB reduces the deflationary effects of negative demand shocks by lowering expectations of future values of the SLB at times when interest-rate cuts are not an option.",

keywords = "DSGE, Inflation, ZLB, DSGE, Inflation, ZLB",

author = "Masolo, {Riccardo M.} and Masolo, {Riccardo Maria} and Winant, {Pablo E.}",

year = "2019",

doi = "10.1016/j.econlet.2019.03.026",

language = "English",

volume = "180",

pages = "54--57",

journal = "Economics Letters",

issn = "0165-1765",

publisher = "Elsevier B.V.",

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TY - JOUR

T1 - The Stochastic Lower Bound

AU - Masolo, Riccardo M.

AU - Masolo, Riccardo Maria

AU - Winant, Pablo E.

PY - 2019

Y1 - 2019

N2 - Since the Great Recession policy rates have been extremely low, but neither absolutely constant, nor exactly set to zero. We thus augment a standard Zero Lower Bound (ZLB) model to study the effects of a Stochastic Lower Bound (SLB) on policy rates. We find that a less predictable SLB reduces the deflationary effects of negative demand shocks by lowering expectations of future values of the SLB at times when interest-rate cuts are not an option.

AB - Since the Great Recession policy rates have been extremely low, but neither absolutely constant, nor exactly set to zero. We thus augment a standard Zero Lower Bound (ZLB) model to study the effects of a Stochastic Lower Bound (SLB) on policy rates. We find that a less predictable SLB reduces the deflationary effects of negative demand shocks by lowering expectations of future values of the SLB at times when interest-rate cuts are not an option.

KW - DSGE

KW - Inflation

KW - ZLB

KW - DSGE

KW - Inflation

KW - ZLB

UR - http://hdl.handle.net/10807/227841

U2 - 10.1016/j.econlet.2019.03.026

DO - 10.1016/j.econlet.2019.03.026

M3 - Article

SN - 0165-1765

VL - 180

SP - 54

EP - 57

JO - Economics Letters

JF - Economics Letters

ER -

The Stochastic Lower Bound

Abstract

Keywords

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