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Credible Commitment to Optimal Escape from a Liquidity Trap : The Role of the Balance Sheet of an Independent Central Bank / Olivier Jeanne and Lars E. O. Svensson.
- Format:
- Book
- Author/Creator:
- Jeanne, Olivier, author.
- Svensson, Lars E. O., author.
- Series:
- Working Paper Series (National Bureau of Economic Research) ; no. w10679.
- NBER working paper series ; no. w10679
- Language:
- English
- Subjects (All):
- Bank liquidity.
- Banks and banking, Central.
- Physical Description:
- 1 online resource (43 pages) : illustrations (black and white).
- Place of Publication:
- Cambridge, Massachusetts : National Bureau of Economic Research, 2004.
- Summary:
- An independent central bank can manage its balance sheet and its capital so as to commit itself to a depreciation of its currency and an exchange-rate peg. This way, the central bank can implement the optimal escape from a liquidity trap, which involves a commitment to higher future inflation. This commitment mechanism works even though, realistically, the central bank cannot commit itself to a particular future money supply. It supports the feasibility of Svensson's Foolproof Way to escape from a liquidity trap.
- Notes:
- Description based on publisher supplied metadata and other sources.
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