Browse

Global vs. Local Liquidity Traps

Cited 0 time in Web of Science Cited 0 time in Scopus
Authors
Cook, David; Devereux, Michael B.
Issue Date
2011-10
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.24 No.4, pp. 471-493
Keywords
Liquidity trapMonetary policyFiscal policyInternational spillovers
Abstract
This paper examines demand spillovers in a two country open economy

model to a demand shock newline (emanating from a single,

source country) sufficiently large to push one or both countries into

a liquidity trap. The zero lower bound on nominal interest rates

keeps the central bank in the source country from fully adjusting

monetary policy. We describe a two country New Keynesian model

with sufficient home bias so as to exclude symmetric movements in

response to demand shocks. We study conditions under which a

liquidity trap in one country might spillover to a trading partner. We

study, under which conditions, a liquidity trap in one country will

lead to a liquidity trap in another country. We also show conditions

under which a liquidity trap in another country can spillover into an

output expansion in a trading partner.
ISSN
1225-0279
Language
English
URI
https://hdl.handle.net/10371/74942
Files in This Item:
Appears in Collections:
College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.24 no.1~4 (2011)
  • mendeley

Items in S-Space are protected by copyright, with all rights reserved, unless otherwise indicated.

Browse