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Article dans une revue Annals of Economics and Statistics Année : 2023

Optimal Monetary Policy in a Liquidity Trap with Heterogeneous Agents

Résumé

This paper derives the optimal money injection at the Zero Lower Bound (ZLB), in a tractable model where households hold heterogeneous money holdings due to explicit financial frictions, such as limited participation and temporary binding credit constraints. This framework is motivated by recent empirical findings. A deleveraging shock generates deflationary pressure and a fall in the real interest rate, pushing the economy to the ZLB. The main result is that open-market operations can stabilize the economy at the ZLB whereas lump-sum money transfers cannot. Moreover, an optimal money injection does not avoid the economy being at the ZLB.
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Dates et versions

halshs-03922385, version 1 (04-01-2023)

Licence

Paternité - Pas d'utilisation commerciale - Pas de modification - CC BY 4.0

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Xavier Ragot. Optimal Monetary Policy in a Liquidity Trap with Heterogeneous Agents. Annals of Economics and Statistics, 2023, 149, pp.97-124. ⟨10.2307/48718081⟩. ⟨halshs-03922385⟩
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