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Liquidity Traps, Prudential Policies, and International Spillovers / Javier Bianchi, Louphou Coulibaly.
- Format:
- Book
- Author/Creator:
- Bianchi, Javier.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w30038.
- NBER working paper series no. w30038
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- We investigate optimal monetary and macroprudential policies in an open economy with aggregate demand externalities and an occasionally binding zero lower bound constraint. The optimal policy balances output stabilization and capital flow management, potentially requiring lower or higher nominal interest rates. We show how international spillovers operate through the world real rate and call for macroprudential policies. Finally, we establish that a world economy with macroprudential policy welfare dominates a laissez-faire regime, in stark contrast with recent concerns.
- Notes:
- Print version record
- May 2022.
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