The zero lower bound and monetary policy in a global economy: A simple analytical investigation
Date
2010
Authors
Fujiwara, Ippei
Sudo, Nao
Teranishi, Yuki
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US Federal Reserve Board
Abstract
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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International Journal of Central Banking
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Journal article
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2099-12-31
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