IDEAS home Printed from https://ideas.repec.org/a/bca/bcarev/v2008y2008iwinter07-08p29-36.html
   My bibliography  Save this article

The Zero Bound on Nominal Interest Rates: Implications for Monetary Policy

Author

Listed:

Abstract

One of the most important factors that must be considered if countries are thinking about lowering the target level of inflation much below 2 per cent is the zero interest bound. Targeting inflation rates that are too low, the authors note, may restrict the ability of monetary policy to respond to economic shocks by limiting the amount by which interest rates can be eased. The size of the shocks hitting an economy, the formation of inflation expectations, and the conduct of monetary policy are also seen to exert an important influence on the risks of hitting the zero interest bound. The evidence that the authors review suggests that the probability of encountering the zero bound when the average inflation is at least 2 per cent are relatively small.

Suggested Citation

  • Claude Lavoie & Stephen Murchison, 2007. "The Zero Bound on Nominal Interest Rates: Implications for Monetary Policy," Bank of Canada Review, Bank of Canada, vol. 2007(Winter), pages 29-36.
  • Handle: RePEc:bca:bcarev:v:2008:y:2008:i:winter07-08:p:29-36
    as

    Download full text from publisher

    File URL: https://www.bankofcanada.ca/wp-content/uploads/2010/06/murchison.pdf
    File Function: full text
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Freydorf, Christoph & Kimmich, Christian & Koudela, Thomas & Schuster, Ludwig & Wenzlaff, Ferdinand, 2012. "Wachstumszwänge in der Geldwirtschaft. Zwischenbericht der Wissenschaftlichen Arbeitsgruppe nachhaltiges Geld," EconStor Preprints 142471, ZBW - Leibniz Information Centre for Economics.
    2. Wenzlaff, Ferdinand & Kimmich, Christian & Richters, Oliver, 2014. "Theoretische Zugänge eines Wachstumszwangs in der Geldwirtschaft," ZÖSS-Discussion Papers 45, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bca:bcarev:v:2008:y:2008:i:winter07-08:p:29-36. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bocgvca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.