Veranstaltung
04
JUN 2024

14:15 - 15:45
IWH Research Seminar

Zero Lower Bound on Inflation Expectations

We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in environments where persistent deflation is a strong possibility.

Wer
Dmitriy Sergeyev  (Bocconi University)
Wo
IWH, conference room and via Zoom
Dmitriy Sergeyev

Zur Person

Dmitriy Sergeyev is an Associate Professor (Department of Economics ) at Bocconi University.

 

To join the lecture via Zoom, please register here.

We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in environments where persistent deflation is a strong possibility. This fact stands in contrast to the standard macroeconomic models with rational expectations. We extend a New Keynesian model with a zero-lower bound on inflation expectations. Unconventional monetary policies, such as forward guidance, are weaker. In liquidity traps, the government spending output multiplier is finite, and adverse aggregate supply shocks are not expansionary. A confidence-driven liquidity trap steady state with deflation does not exist.

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