TY - JOUR
T1 - The zero lower bound and monetary policy in a global economy
T2 - A simple analytical investigation
AU - Fujiwara, Ippei
AU - Sudo, Nao
AU - Teranishi, Yuki
PY - 2010/3/1
Y1 - 2010/3/1
N2 - How should monetary policy cooperation be designed when more than one country is simultaneously facing zero lower bounds on nominal interest rates? To answer this question, we examine monetary policy cooperation with both optimal discretion and commitment policies in a two-country model. We reach the following conclusions. Under discretion, monetary policy cooperation is characterized by the intertemporal elasticity of substitution (IES), a key parameter measuring international spillovers, and no history dependency. On the other hand, under commitment, monetary policy featureshistory dependence with international spillover effects.
AB - How should monetary policy cooperation be designed when more than one country is simultaneously facing zero lower bounds on nominal interest rates? To answer this question, we examine monetary policy cooperation with both optimal discretion and commitment policies in a two-country model. We reach the following conclusions. Under discretion, monetary policy cooperation is characterized by the intertemporal elasticity of substitution (IES), a key parameter measuring international spillovers, and no history dependency. On the other hand, under commitment, monetary policy featureshistory dependence with international spillover effects.
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M3 - Article
AN - SCOPUS:79751497691
SN - 1815-4654
VL - 6
SP - 103
EP - 134
JO - International Journal of Central Banking
JF - International Journal of Central Banking
IS - 1
ER -