Damjanovic, Tatiana; Girdėnas, Šarūnas - In: Journal of Economic Dynamics and Control 45 (2014) C, pp. 146-164
We study optimal monetary policy in a New Keynesian model at the zero bound interest rate where households use cash alongside house equity borrowing to conduct transactions. The amount of borrowing is limited by a collateral constraint. When either the loan to value ratio declines or house...