BoE paper explores liquidity traps with ‘Hank’ model
New research published by the Bank of England explores how central banks should respond to a liquidity trap when policy is constrained by the zero lower bound.
Dario Bonciani and Joonseok Oh tackle this question using a heterogeneous-agent New Keynesian (Hank) model, featuring workers and firm owners. The workers face the risk of becoming unemployed, and “incomplete markets” mean they cannot fully insure themselves against this possibility. Firm owners, by contrast, do not face this risk.
The
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@centralbanking.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@centralbanking.com
More on Monetary Policy
Fed’s Bullard revises rate projection upward
Policy-maker says bank stress likely to fade but inflation fight continues
Banknotes: January to March 2023
A round-up of news and salient issues that have affected central bankers in the past three months
Riksbank governor stresses Swedish banks’ strength
Thedéen says “inflation needs to come down significantly” in 2023
Nigeria and Morocco raise rates
Inflation hits record level in Morocco and remains high in Nigeria
SNB increases rates by 50bp in wake of Credit Suisse crisis
Swiss central bank sold Sfr27 billion in foreign currency in Q4 to tighten financial conditions
Brazilian MPC holds rates despite pressure
President says policy rate is “absurd” but MPC says expectations not yet anchored round targets
Costa Rica cuts rates, bucking Latin American trend
Argentina resumes monetary tightening, while Paraguay continues to hold
Three Asian central banks raise rates
Central banks in Taiwan, the Philippines and Hong Kong continue with monetary tightening