Robust monetary policy under uncertainty about the lower bound

Central banks face uncertainty about the true location of the effective lower bound (ELB) on nominal interest rates. We model optimal discretionary monetary policy during a liquidity trap when the central bank designs policy that is robust with respect to the location of the ELB. If the central bank fears the worst-case location of the ELB, monetary conditions will be more expansionary before the liquidity trap occurs.

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Year of publication:	2019
Authors:	Tillmann, Peter
Publisher:	Marburg : Philipps-University Marburg, School of Business and Economics
Subject:	optimal monetary policy \| discretion \| robust control \| uncertainty \| liquidity trap

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Series:	MAGKS Joint Discussion Paper Series in Economics ; 14-2019
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	1663130779 [GVK] hdl:10419/204808 [Handle]
Classification:	E31 - Price Level; Inflation; Deflation ; E32 - Business Fluctuations; Cycles ; E58 - Central Banks and Their Policies
Source:	EconStor

Persistent link: https://www.econbiz.de/10012111129