The zero-interest-rate and the role of the exchange rate for monetary policy in Japan
In this paper we study the role of the exchange rate in conducting monetary policy in an economy with near-zero nominal interest rates as experienced in Japan since the mid-1990s. Our analysis is based on an estimated model of Japan, the United States and the euro area with rational expectations and nominal rigidities. First, we provide a quantitative analysis of the impact of the zero bound on the effectiveness of interest rate policy in Japan in terms of stabilizing output and inflation. Then we evaluate three concrete proposals that focus on depreciation of the currency as a way to ameliorate the effect of the zero bound and evade a potential liquidity trap. Finally, we investigate the international consequences of these proposals. Klassifikation: E31, E52, E58, E61
| Author: | Günter Coenen, Volker Wieland |
|---|---|
| URN: | urn:nbn:de:hebis:30-10157 |
| Series (Serial Number) | CFS working paper series (2003, 09) |
| Document Type: | Working Paper |
| Language: | English |
| Date of Publication (online): | 13.06.2005 |
| Year of first Publication: | 2003 |
| Publishing Institution: | Univ.-Bibliothek Frankfurt am Main |
| Tag: | exchange rates; liquidity trap ; monetary policy rules ; nominal rigidities ; rational expectations ; zero interest rate bound |
| Source: | CFS working paper ; 2003,09 |
| HeBIS PPN: | 203502205 |
| Institutes: | Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Veröffentlichungsvertrag für Publikationen ohne Print on Demand |
