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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, Lars Svensson

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
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. A SIMPLE OPEN ECONOMY MODEL OF THE LIQUIDITY TRAP""; ""A. The Structure of the Economy""; ""B. Equilibrium Relationships""; ""C. Productivity""; ""D. Monetary Policy""; ""E. A Liquidity Trap in Period 1""; ""F. The Optimal Policy Under Commitment""; ""G. Implementing the Commitment Equilibrium""; ""III. THE BALANCE- SHEET CONCERNS OF CENTRAL BANKS""; ""IV. HOW AN INDEPENDENT CENTRAL BANK CAN COMMIT TO A FUTURE PRICE LEVEL""; ""V. GENERALIZATIONS""; ""A. A Multiperiod Liquidity Trap""; ""B. Generalizing the Capital Constraint""
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (44 p.)
Specific Material Designation
Form Of Item

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