Unconventional policy should be used rapidly – Fed paper
Researchers find 20–50% chance that US will face zero lower bound in next decade
Unconventional monetary policies help economies recover from recessions but take time to have an effect, according to a paper published by the US Federal Reserve.
In the paper, Hess Chung et al examine how effective the Fed’s quantitative easing and forward guidance tools were in helping recovery after the financial crisis. They find there is roughly a 20–50% probability that the federal funds rate will be constrained by the zero lower bound at some point over the next decade.
“There is a
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