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Understanding Benign Liquidity Traps: The Case of Japan
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Stefan Homburg
Published/Copyright:
November 30, 2019
Abstract
Japan has been in a benign liquidity trap since the 1990s. In a benign liquidity trap, interest rates approach zero and monetary policy is ineffective but output and employment perform decently. Such a pattern contradicts traditional macro theories. This paper introduces a monetary general equilibrium model that is compatible with Japan’s performance and resolves puzzles associated with liquidity traps. Possible conclusions for Anglo-Saxon countries and eurozone members are also discussed.
Keywords: Liquidity trap; Japan; interest rate determination; monetary policy; quantitative easing; forward guidance; dynamic general equilibrium; secular stagnation
Published Online: 2019-11-30
Published in Print: 2017-08-01
© 2019 by Walter de Gruyter Berlin/Boston
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Keywords for this article
Liquidity trap;
Japan;
interest rate determination;
monetary policy;
quantitative easing;
forward guidance;
dynamic general equilibrium;
secular stagnation
Articles in the same Issue
- Understanding Benign Liquidity Traps: The Case of Japan
- Tax Evasion, Corruption and Tax Loopholes
- Gender Quotas and Human Capital Formation: A Relative Deprivation Approach
- Children’s Opportunities in Germany – An Application Using Multidimensional Measures
- Fiscal Equalization and Tax Enforcement
