Escaping the Great Recession

• 成果类型: Article
• 署名作者: Bianchi, Francesco; Melosi, Leonardo
• 署名单位: Duke University; Federal Reserve System - USA; Federal Reserve Bank - Chicago
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20160186
• 发表日期: 2017
• 页码: 1030-1058
• 关键词: price-level determinacy; regime switches; monetary-policy; fiscal-policy; inflation; expectations; volatility; uncertainty

摘要

We show that policy uncertainty about how the rising public debt will be stabilized accounts for the lack of deflation in the US economy at the zero lower bound. We first estimate a Markov-switching VAR to highlight that a zero-lower-bound regime captures most of the comovements during the Great Recession: a deep recession, no deflation, and large fiscal imbalances. We then show that a microfounded model that features policy uncertainty accounts for these stylized facts. Finally, we highlight that policy uncertainty arises at the zero lower bound because of a trade-off between mitigating the recession and preserving long-run macroeconomic stability.