The stochastic lower bound

Riccardo M. Masolo and Pablo Winant ()
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Pablo Winant: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 754, Bank of England working papers from Bank of England

Abstract: Since the Great Recession policy rates have been extremely low, but neither absolutely constant, nor exactly set to zero. We thus augment a standard zero lower bound model to study the effects of a stochastic lower bound (SLB) on policy rates. We find that a less predictable SLB helps keep inflation closer to target by lowering expectations of future values of the SLB when interest rate cuts are not an option.

Keywords: Zero lower bound; DSGE (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2018-08-24
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Related works:
Journal Article: The Stochastic Lower Bound (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0754

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