Zero lower bound
ZLB magnifies impacts of uncertainty shocks, paper says
Differences caused by zero lower bound are “economically important”, researchers say
BoJ economists seek best escape route from liquidity traps
Some policies are more effective than others, but a combination can generate stronger effects, researchers find
Fed research proposes micro-founded approach to term structure modelling
Economists build structural New Keynesian model in contrast to the statistical approaches in much of the available literature, identifying key factors shaping term premiums
Netherlands paper looks at market reaction to Fed forecasts
Implied forecasts of inflation affect market expectations, paper finds
Norges Bank paper studies forecast asymmetry at lower bound
Effective lower bound need not translate into asymmetries in other forecast variables, authors find; regime-switching DSGE model helps overcome Lucas critique
Former Irish governor calls for higher inflation targets
Concerns about the consequences of raising inflation targets are overblown, say Patrick Honohan and three other monetary policy experts
Anticipation effects can make lower bound a self-fulfilling prophecy – BoJ paper
New Keynesian model implies an economy can be drawn on to the zero lower bound more quickly when people expect it; negative rates have only a small impact on duration
Riksbank paper looks to medieval Europe for ZLB solution
Idea of a “Gesell tax” on holdings of cash could help central bankers overcome the zero lower bound – an idea already tested by kings in medieval Europe
Effective lower bound has ‘tail risk’ influence on monetary policy, ECB paper argues
The ‘tail risk’ induced by the possibility of rates reaching their effective lower bound can cause serious undershooting of inflation targets, an ECB working paper argues
BoJ paper models impact of guidance on expectations
Announcing forward guidance before reaching the effective lower bound can help to “positively influence” inflation and output growth, the author finds
Hitting inflation targets may be harder now, thanks to lower bound – paper
Working paper warns of potential for lower bound episodes to affect expectations of when they will occur in future, something that can act as a drag on inflation in the present
Tiberius’s experiences with zero interest rates in 33 AD
Can the European Central Bank learn lessons from the use of zero interest rates by the Romans in 33 AD as they grappled with their own fiscal and monetary crisis?
Bank of Thailand frets over zero lower bound
Minutes show latest policy decision influenced by worries over financial imbalances and perceived need to maintain “policy space” in event of economic hit
Central bank gold purchases near record levels
World Gold Council argues negative interest rates make gold a favourable asset, but Thomson Reuters team sees other factors at play
Economists still scrambling to adapt models to lower bound
Many traditional economic models perform poorly now major economies are near the effective lower bound, but economists at the RES annual conference offer a range of solutions
Carney airs scepticism on negative rates
Bank of England governor warns negative rates may only work through exchange rate channel, which would result in a ‘zero sum game’