What are some of the alternative channels that would have possibly helped boost output despite low interest rates?: Difference between revisions
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''In order to get Japan out of this Liquidity Trap they must reach a target inflation rate over the long term and stick with it no matter what the cost.'' | '''In order to get Japan out of this Liquidity Trap they must reach a target inflation rate over the long term and stick with it no matter what the cost.''' | ||
During the long economic slump in Japan, the monetary policy seemed to focus on a very low interest rate around 1995 to a near zero interest rate in 1999 and worsening problems ever since. The intent of the monetary policy has been to lower expectations of future interest rates. In order to sitmulate the demand for goods and services | |||
During the long economic slump in Japan, the monetary policy seemed to focus on a very low interest rate around 1995 to a near zero interest rate in 1999 and worsening problems ever since. The intent of the monetary policy has been to lower expectations of future interest rates. In order to sitmulate the demand for goods and services. But in a liquidity trap the solution is to raise future price expectations. | |||
[[Japanese Liquidity Trap]][[Which alternative channels were used? What worked? ]] | [[Japanese Liquidity Trap]][[Which alternative channels were used? What worked? ]] | ||
Revision as of 18:56, 5 December 2006
In order to get Japan out of this Liquidity Trap they must reach a target inflation rate over the long term and stick with it no matter what the cost.
During the long economic slump in Japan, the monetary policy seemed to focus on a very low interest rate around 1995 to a near zero interest rate in 1999 and worsening problems ever since. The intent of the monetary policy has been to lower expectations of future interest rates. In order to sitmulate the demand for goods and services. But in a liquidity trap the solution is to raise future price expectations.
Japanese Liquidity TrapWhich alternative channels were used? What worked?
