Keynes emphasized a specific situation in which the liquidity preference becomes absolute, leading to monetary policy ineffectiveness when nominal interest approaches the zero-bound rate. This situation was termed a liquidity trap (LT) by Robertson and was popularized by the Hicks- Hansen...

Keynes emphasized a specific situation in which the liquidity preference becomes absolute, leading to monetary policy ineffectiveness when nominal interest approaches the zero-bound rate. This situation was termed a liquidity trap (LT) by Robertson and was popularized by the Hicks- Hansen...

Keynes has emphasized a particular situation in which the liquidity preference becomes absolute, leading to monetary policy ineffectiveness: the near zero nominal rate of interest does not allow negative values of the real interest rate. This situation is termed liquidity trap (LT) and although...