Liquidity Trap and Stability of Taylor Rules

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Le Riche, Antoine; Magris, Francesco; Parent, Antoine;
(2016)
  • Publisher: HAL CCSD
  • Subject: liquidity trap | [ SHS.ECO ] Humanities and Social Sciences/Economies and finances | [SHS.ECO]Humanities and Social Sciences/Economies and finances | cash-in-advance | [SHS.ECO] Humanities and Social Sciences/Economies and finances | multiple equilibria | monetary policy

We study a productive economy with fractional cash-in-advance constraint on consumption expenditures. Government issues safe bonds and levies taxes to finance public expenditures, while the Central Bank follows a feedback Taylor rules by pegging the nominal interest rat... View more
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