蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Liquidity Traps and Jobless Recoveries
蝌蚪网 Journal: Macroeconomics
(pp. 165–204)
Abstract
This paper proposes a model that explains the joint occurrence of liquidity traps and jobless growth recoveries. Its key elements are downward nominal wage rigidity, a Taylor-type interest rate feedback rule, the zero lower bound on nominal interest rates, and a confidence shock. Absent a change in policy, the model predicts that low inflation and high unemployment become chronic. With capital accumulation, the model predicts, in addition, an investment slump. The paper identifies a New Fisherian effect, whereby raising the nominal interest rate to its intended target for an extended period of time can boost inflationary expectations and thereby foster employment.Citation
Schmitt-Groh茅, Stephanie, and Mart铆n Uribe. 2017. "Liquidity Traps and Jobless Recoveries." 蝌蚪网 Journal: Macroeconomics 9 (1): 165–204. DOI: 10.1257/mac.20150220Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E31 Price Level; Inflation; Deflation
- E32 Business Fluctuations; Cycles
- E43 Interest Rates: Determination, Term Structure, and Effects
- E52 Monetary Policy
- F44 International Business Cycles
- G01 Financial Crises