Optimal forward guidance
Optimal forward guidance is the simple policy of keeping interest rates low for some optimally determined number of periods after the liquidity trap ends and moving to normal-times optimal policy thereafter. I solve for the optimal duration in closed form in a new Keynesian model and show that it is...
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| Format: | Article |
| Language: | English |
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American Economic Association
2019
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| Online Access: | View Fulltext in Publisher |