Abstract

ABSTRACT:

This paper discusses whether monetary policy at the effective lower bound (ELB) is less effective, generates greater international spillovers, or is "stickier" than conventional monetary policy. It argues that monetary policy at the ELB can be potent and that there has thus far been no convincing evidence that it has greater international spillovers through capital flows and exchange rates than comparable adjustments in interest rates. It may be more challenging to raise rates off the ELB than to raise rates from higher levels—possibly due to counterbalancing effects through the exchange rate—although there are only anecdotes to support this stickiness rather than any formal, empirical evidence.

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Additional Information

ISSN
1533-4465
Print ISSN
0007-2303
Pages
pp. 521-541
Launched on MUSE
2019-09-05
Open Access
No
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