Expectations, Deflation Traps and Macroeconomic Policy
| dc.contributor.author | Evans, George W., 1949- | |
| dc.contributor.author | Honkapohja, Seppo, 1951- | |
| dc.date.accessioned | 2011-02-10T00:50:29Z | |
| dc.date.available | 2011-02-10T00:50:29Z | |
| dc.date.issued | 2009-07-06 | |
| dc.description | 32 p. | en_US |
| dc.description.abstract | We examine global economic dynamics under infinite-horizon learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), we find that under normal monetary and fiscal policy the intended steady state is locally but not globally stable. Unstable deflationary paths can arise after large pessimistic shocks to expectations. For large expectation shocks pushing interest rates to the zero lower bound, temporary increases in government spending can be used to insulate the economy from deflation traps. | en_US |
| dc.identifier.uri | https://hdl.handle.net/1794/10967 | |
| dc.language.iso | en_US | en_US |
| dc.publisher | University of Oregon, Dept of Economics | en_US |
| dc.relation.ispartofseries | University of Oregon Economics Department Working Papers;2010-5 | |
| dc.subject | Adaptive learning | en_US |
| dc.subject | Monetary policy | en_US |
| dc.subject | Fiscal policy | en_US |
| dc.subject | Zero interest rate lower bound | en_US |
| dc.title | Expectations, Deflation Traps and Macroeconomic Policy | en_US |
| dc.type | Working Paper | en_US |