IDEAS home Printed from https://ideas.repec.org/a/fip/fedreb/98114.html
   My bibliography  Save this article

Can China Avoid a Liquidity-Trap Recession? Some Unintended Consequences of Macroprudential Policies

Author

Listed:
  • Russell Wong

Abstract

A liquidity trap is a nightmare for central banks because the zero lower bound constrains them from further reducing the nominal interest rate to stimulate the economy. The nightmare can be long: For example, Japan — formerly the world's second-largest economy after the U.S. — has been battling its liquidity trap since its real-estate bubble burst in 1990. Recently, some commentators have argued that a liquidity trap is imminent in China — currently the world's second-largest economy — pointing to signs such as deposit surge (despite declining interest rates), mounting deflationary pressures and high unemployment rates among youth.

Suggested Citation

  • Russell Wong, 2024. "Can China Avoid a Liquidity-Trap Recession? Some Unintended Consequences of Macroprudential Policies," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 24(12), April.
    • Handle: RePEc:fip:fedreb:98114
    as

    Download full text from publisher

    File URL: https://www.richmondfed.org/publications/research/economic_brief/2024/eb_24-12
    File Function: Briefing
    Download Restriction: no
    ---><---

    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:fip:fedreb:98114. 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: Christian Pascasio (email available below). General contact details of provider: https://edirc.repec.org/data/frbrius.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.