This paper analyzes the dynamic properties of the Taylor rule with the zero lower bound on the nominal interest rate in an optimizing monetary model with overlapping generations. The main result is that the presence of wealth effects is not sufficient to rule out the possibility of infinite equilibrium paths with decelerating inflation. In particular, the operation of wealth effects does not avoid the occurrence of liquidity traps when the central bank implements a Taylor-type interest-rate feedback rule.
Annicchiarico, B., Piergallini, A., & Marini, G. (2007). Wealth effects, the Taylor rule and the liquidity trap.
Tipologia: | Altro |
Citazione: | Annicchiarico, B., Piergallini, A., & Marini, G. (2007). Wealth effects, the Taylor rule and the liquidity trap. |
Settore Scientifico Disciplinare: | Settore SECS-P/01 - Economia Politica |
Data di pubblicazione: | mag-2007 |
Titolo: | Wealth effects, the Taylor rule and the liquidity trap |
Autori: | Annicchiarico, B;Piergallini, A;Marini, G |
Autori: | |
Appare nelle tipologie: | 99 - Altro |
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SSRN-id986129.pdf | N/A | Open Access Visualizza/Apri |