Operation Mechanism of Macro-Policy Based on Zero Lower Bound
Read
DownLoad |
| Title | Operation Mechanism of Macro-Policy Based on Zero Lower Bound
|
| Author | Ma Li and Lou Tiantian |
| Organization | Economics and Management School of Wuhan University |
| Email | manny@whu.edu.cn；2009302350046@whu.edu.cn |
| Key Words | Monetary Policy; Fiscal Policy; Zero Lower Bound; Operation Mechanism |
| Abstract | Western developed countries such as the United States lowered interest rate to promote economic recovery in the crisis. While interest rate can’t be under zero in reality, analyzing operation mechanism of macro-policy based on zero lower bound would be of great significance. This paper establishes a DSGE model including zero lower bound under the assumption of markets clearing. By means of mathematical modeling, impulse response analysis and simulation, we compare the operation mechanism of macro-policy composed of monetary and fiscal policy with and without zero lower bound. The conclusions show that model without zero lower bound can’t depict the economic situation and policy effect in the crisis; while under the zero lower bound, the effectiveness of monetary policy was further reduced, and the effectiveness of fiscal stimulus was enhanced. Finally the related policy proposal is put forward. |
| Serial Number | WP702 |
| Time | 2014-09-16 |
|