Inflation targeting and liquidity traps under endogenous credibility

• 成果类型: Article
• 署名作者: Hommes, Cars; Lustenhouwer, Joep
• 署名单位: University of Amsterdam; Tinbergen Institute; Bank of Canada; Otto Friedrich University Bamberg
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2019.01.027
• 发表日期: 2019
• 页码: 48-62
• 关键词: Monetary policy; liquidity traps; Heterogeneous expectations; bounded rationality

摘要

Policy implications are derived for an inflation-targeting central bank, whose credibility is endogenous and depends on its past ability to achieve its targets. This is done in a New Keynesian framework with heterogeneous and boundedly rational expectations. We find that the region of allowed policy parameters is strictly larger than under rational expectations. However, when the zero lower bound on the nominal interest rate is accounted for, self-fulfilling deflationary spirals can occur, depending on the credibility of the central bank. Deflationary spirals can be prevented with a high inflation target and aggressive monetary easing. (C) 2019 Elsevier B.V. All rights reserved.