Information value of the interest rate and the zero lower bound

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buir.contributor.authorLee, Sang Seok
dc.citation.epage1784en_US
dc.citation.issueNumber7
dc.citation.spage1758en_US
dc.citation.volumeNumber24
dc.contributor.authorLee, Sang Seoken_US
dc.date.accessioned2020-02-10T05:56:43Z
dc.date.available2020-02-10T05:56:43Z
dc.date.issued2020
dc.departmentDepartment of Economicsen_US
dc.description.abstractWhy is a zero lower bound episode long-lasting and disruptive? This paper proposes the interruption of information flow from the central bank’s interest rate decision to the private sector as a channel by which the destabilizing effect of the zero lower bound constraint on the nominal interest rate is amplified. This mechanism is incorporated into the new Keynesian model by modifying its information structure. This paper shows that the information loss at the zero lower bound can increase (a) the duration of the zero lower bound episodes and (b) the size of deflation and output gap loss. The result in this paper demonstrates that enhanced information sharing by the central bank about the state of the economy can be effective at alleviating the cost of the zero lower bound.en_US
dc.identifier.doi10.1017/S1365100518001037en_US
dc.identifier.issn1365-1005
dc.identifier.urihttp://hdl.handle.net/11693/53200
dc.language.isoEnglishen_US
dc.publisherCambridge University Pressen_US
dc.relation.isversionofhttps://dx.doi.org/10.1017/S1365100518001037en_US
dc.source.titleMacroeconomic Dynamicsen_US
dc.subjectInterest rate zero lower bounden_US
dc.subjectAsymmetric informationen_US
dc.subjectForward guidanceen_US
dc.subjectCentral Bank transparencyen_US
dc.titleInformation value of the interest rate and the zero lower bounden_US
dc.typeArticleen_US
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