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This paper investigates the macroeconomic risks associated with undesirably low inflation using a medium-sized New Keynesian model. We consider different causes of persistently low inflation, including a downward shift in long-run inflation expectations, a fall in nominal wage growth, and a...
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systems, we find that following a liquidity funding shock, both credit and GDP decline in different amounts and lengths. GDP …
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This paper draws from Japan's recent monetary experiment to examine the effects of an increase in the inflation target … during a liquidity trap. We review Japanese data and examine through a VAR model how macroeconomic variables respond to an … rate shock are needed to successfully account for the behavior of nominal and real variables in Japan since late 2012. Our …
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