Scarcity of safe assets, inflation, and the policy trap

• 成果类型: Article
• 署名作者: Andolfatto, David; Williamson, Stephen
• 署名单位: Federal Reserve System - USA; Simon Fraser University; Washington University (WUSTL)
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2015.03.008
• 发表日期: 2015
• 页码: 70-92
• 关键词: Safe assets; collateral; Policy trap; monetary policy

摘要

A goal of this paper is to make sense of the seemingly puzzling behavior of interest rates and inflation - and the role of central banks in that behavior - during and after the Great Recession, particularly in the United States. To this end, we construct a model in which government debt plays a key role in exchange, and can bear a liquidity premium. If asset market constraints bind, then there need not be deflation under an indefinite zero interest rate policy (ZIRP). Further, ZIRP may not be optimal under these circumstances. A Taylor-rule central banker could be subject to a ZIRP trap and persistently undershoot target inflation. As well, a liquidity premium on government debt creates additional Taylor rule perils, because of a persistently low real interest rate. We make a case that this is the key policy predicament currently faced by many central banks in the world. (C) 2015 Elsevier B.V. All rights reserved.