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Low rates, zero lower bound and monetary policy black hole

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  • Lei Lv
  • Zhi-Xin Liu

Abstract

This article provides an analytical characterization of the effects of supply shocks and demand shocks on the economy of long-term zero lower bound. We consider a tractable New Keynesian model with price stickiness and show that supply shocks will make the economy more tightening while demand shocks will make the economy more expansionary.

Suggested Citation

  • Lei Lv & Zhi-Xin Liu, 2021. "Low rates, zero lower bound and monetary policy black hole," Applied Economics Letters, Taylor & Francis Journals, vol. 28(13), pages 1114-1120, July.
  • Handle: RePEc:taf:apeclt:v:28:y:2021:i:13:p:1114-1120
    DOI: 10.1080/13504851.2020.1803475
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