Bodenstein, Martin; Hebden, James; Nunes, Ricardo - Federal Reserve Board (Board of Governors of the … - 2010
When the nominal interest rate reaches its zero lower bound, credibility is crucial for conducting forward guidance. We … interest rate below zero. In our model, an announcement of a low interest rate for an extended period does not necessarily … credibility. We find increased forecast uncertainty in inflation and the output gap at the zero lower bound while interest rate …