Zero lower bound may have cost US $1.7 trillion
The zero lower bound on interest rates in the US made no material contribution to the lull in output in 2008, but played a role in slowing down economic activity, argues John Williams in a paper published by the San Francisco Federal Reserve in October.
Based on model simulations, Williams, the central bank's director of research, finds that additional rate cuts to the amount of 4% would have curbed the spike in unemployment, and helped bring inflation and unemployment rates to steady values
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