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Cited by 1,789

The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.

Zero Bound on Interest Rates and Optimal Monetary Policy

Open access
Eggertsson, Gauti B, Woodford, Michael, Professor·2003·Brookings Papers on Economic Activity
DOI 10.1353/eca.2003.0010
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Abstract

The consequences for the proper conduct of monetary policy of the existence of a lower bound of zero for overnight nominal interest rates has recently become a topic of lively interest.In Japan the call rate (the overnight cash rate analogous to the federal funds rate in the United States) has been within 50 basis points of zero since October 1995, and it has been essentially equal to zero for most of the past four years (figure 1).Thus the Bank of Japan has had little room to further reduce shortterm nominal interest rates in all that time.Meanwhile Japan's growth has remained anemic, and prices have continued to fall, suggesting a need for monetary stimulus.Yet the usual remedy-lower short-term nominal interest rates-is plainly unavailable.Vigorous expansion of the monetary base has also seemed to do little to stimulate demand under these circumstances: as figure 1 also shows, the monetary base is now more than twice as large, relative to GDP, as it was in the early 1990s.In the United States, meanwhile, the federal funds rate has now been reduced to only 1 percent, and signs of recovery remain exceedingly fragile.This has led many to wonder if this country might not also soon find itself in a situation where interest rate policy is no longer available as a 139

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Metadata

Authors
Eggertsson, G. B., & Woodford, M.
Venue
Brookings Papers on Economic Activity
Publisher
Project MUSE
Published
2003
Volume
2003
Issue
1
Pages
139-233
ISSN
  • 0007-2303 (ISSN-L)
  • 1533-4465
DOI
10.1353/eca.2003.0010
OpenAlex
W1975063543
Cited by
1,789
References
1
FWCI
58.72
Type
journal article
Language
en
Open access
bronze

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