Monetary Policy and Financial Markets at the Effective Lower Bound
I discuss what determines the effective lower bound (ELB) for the policy rate and argue that the ELB is not hard, but rather soft, and that it is probably slightly negative. I argue that, at the ELB, current output can be increased by (i) monetary policy that extends the period of credibly low polic...
Saved in:
| Published in | Journal of money, credit and banking Vol. 42; no. s1; pp. 229 - 242 |
|---|---|
| Main Author | |
| Format | Journal Article |
| Language | English |
| Published |
Malden, USA
Blackwell Publishing Inc
01.09.2010
Wiley Periodicals Incorporated |
| Subjects | |
| Online Access | Get full text |
Cover
Loading…
| Abstract | I discuss what determines the effective lower bound (ELB) for the policy rate and argue that the ELB is not hard, but rather soft, and that it is probably slightly negative. I argue that, at the ELB, current output can be increased by (i) monetary policy that extends the period of credibly low policy rates and generates inflation expectations, (ii) financial-stability policy— which is distinct from monetary policy— that reduces the spreads between market interest rates and the policy rate, and (iii) fiscal policy that increases the neutral real rate by reducing expected growth of government expenditure and increases potential output by increasing current government expenditure. |
|---|---|
| AbstractList | I discuss what determines the effective lower bound (ELB) for the policy rate and argue that the ELB is not hard, but rather soft, and that it is probably slightly negative. I argue that, at the ELB, current output can be increased by (i) monetary policy that extends the period of credibly low policy rates and generates inflation expectations, (ii) financial‐stability policy—which is distinct from monetary policy—that reduces the spreads between market interest rates and the policy rate, and (iii) fiscal policy that increases the neutral real rate by reducing expected growth of government expenditure and increases potential output by increasing current government expenditure. |
| Author | SVENSSON, LARS E.O. |
| Author_xml | – sequence: 1 givenname: LARS E.O. surname: SVENSSON fullname: SVENSSON, LARS E.O. |
| BookMark | eNqNkMtOwzAQRS1UJNrCJyD5BxLGcfzIggWt-gDSwqKUpeWkjkgICYoDbf8eh6Cumc2M7tUZzdwRGlR1ZRDCBHzi6qbwCaPSCznhfgBOBaBU-IczNDwZAzQECAIvkCK6QCNrCwCIWEiGaLJy61rdHPFzXebpEetqh-d5pas01yVe6ebdtBbrFrdvBs-yzKRt_m1wXO9Ngyf1V7W7ROeZLq25-utj9DKfbaZLL35a3E_vYi8NJRceCxKWUQpaaA0BJ4xHUvAsjEAEIAyNDMtkkrhOTCR1xEGEQBIjmNZO0XSMZL83bWprG5Opzyb_cKcrAqrLQhWqe1l1L6suC_WbhTo49LZH93lpjv_m1MNqOnGT4697vrBt3Zz4EIQMIwHO93o_t605nHwXnuKCCqZe1wu1XT8ul5t4qyT9ASlyflI |
| CitedBy_id | crossref_primary_10_1108_17576381111182918 crossref_primary_10_1016_j_econmod_2018_03_013 crossref_primary_10_1017_S136510051500111X crossref_primary_10_1080_09538259_2023_2280869 crossref_primary_10_1016_j_econlet_2020_108970 crossref_primary_10_1016_j_jbankfin_2023_107033 crossref_primary_10_1057_s41260_016_0009_4 crossref_primary_10_1111_coep_12238 crossref_primary_10_2139_ssrn_2955483 |
| Cites_doi | 10.2307/2534694 10.1257/089533003772034934 10.2139/ssrn.1440289 |
| ContentType | Journal Article |
| Copyright | 2010 The Ohio State University |
| Copyright_xml | – notice: 2010 The Ohio State University |
| DBID | BSCLL AAYXX CITATION |
| DOI | 10.1111/j.1538-4616.2010.00337.x |
| DatabaseName | Istex CrossRef |
| DatabaseTitle | CrossRef |
| DatabaseTitleList | CrossRef |
| DeliveryMethod | fulltext_linktorsrc |
| Discipline | Economics Business |
| EISSN | 1538-4616 |
| EndPage | 242 |
| ExternalDocumentID | 10_1111_j_1538_4616_2010_00337_x JMCB337 40784970 ark_67375_WNG_VNKHHTLV_8 |
| Genre | article |
| GroupedDBID | -~X .3N .GA .L6 .Y3 05W 0R~ 10A 1OC 1OL 29L 31~ 33P 3R3 3V. 4.4 50Y 50Z 51W 51Y 52M 52O 52Q 52S 52T 52U 52W 5GY 5HH 5LA 5VS 66C 702 706 709 70B 7PT 7WY 7X1 8-0 8-1 8-3 8-4 8-5 85S 885 8A9 8FL 8G5 8GL 8R4 8R5 8UM 8VB 930 A04 AABCJ AAESR AAGGK AAHHS AAHKG AAJUZ AAMZP AAONW AAOUF AARRQ AASGY AAVNP AAXGD AAXRX AAYOK AAZKR ABATG ABBHK ABCQN ABCUV ABCVL ABECW ABEML ABEZY ABKVW ABLJU ABPFR ABPPZ ABPVW ABSIS ABSOO ABUWG ABYAD ABYYQ ACAHQ ACBKW ACBWZ ACCFJ ACCZN ACGFO ACGFS ACHIS ACHQT ACMKW ACNCT ACPOU ACSCC ACTWD ACUBG ACXME ACXQS ACYXD ADBBV ADDAD ADEMA ADEOM ADFYE ADGDI ADHJG ADIZJ ADKYN ADMGS ADULT ADWTG ADXAS ADZMN AEEZP AEHYH AEIGN AEIMD AEQDE AERNI AEUPB AEUQT AEUYR AFAIT AFBPY AFFNX AFFPM AFGKR AFKFF AFKRA AFPWT AFTQD AFVGU AFXHP AFZIM AFZJQ AGJLS AHAJD AHBTC AHJEN AI. AIAGR AIFKG AIHXQ AIHXW AIURR AIWBW AJBDE AJYWA AKLHS AKNIR AKVCP ALAGY ALMA_UNASSIGNED_HOLDINGS ALUQN AMBIC AMBMR AMYDB ANBFE ANIOZ ASPBG ASTYK AVWKF AZBYB AZFZN AZQEC AZVAB BAFTC BDRZF BENPR BEZIV BFHJK BKOMP BKUOZ BMXJE BNVMJ BPHCQ BQESF BROTX BRXPI BSCLL BY8 CAG CBXGM CCKSF CCPQU COF CS3 CWXUR CYVLN D-C D-D DCZOG DPXWK DR2 DRFUL DRSSH DU5 DWQXO E.L EBE EBR EBS EBU EJD F00 F5P FEDTE FJW FOMLG FRNLG FVMVE G-S G.N G50 GICCO GNUQQ GODZA GROUPED_ABI_INFORM_COMPLETE GROUPED_ABI_INFORM_RESEARCH GUPYA GUQSH HFR HGD HVGLF HZ~ IAO IEA IGG IOF ISE ISN ITC IX1 J0M JAAYA JAS JBC JBMMH JBZCM JENOY JHFFW JKQEH JLEZI JLXEF JPL JPPEU JSODD JST K1G K48 K60 K6~ LATKE LC2 LC4 LEEKS LH4 LITHE LOXES LP6 LP7 LUTES LW6 LYRES M0C M1F M2O MBR MBU MEWTI MK4 MRFUL MRSSH MSFUL MSI MSSSH MUA MUP MUS MVM MXFUL MXSSH N04 N06 N95 N9A NF~ NHB O66 O9- P2P P2W P2Y P4C PADUT PQBIZ PQQKQ PRG PROAC Q.N Q11 Q2X QB0 QJJ QN7 QWB R.K RC9 RNS ROL RWL RX1 RXW SA0 SUPJJ TAE TH9 TN5 UB1 V8K VH1 VQA W8V W99 WBKPD WEBCB WH7 WIH WII WOHZO WQZ WSUWO WXSBR XG1 XI7 YQT YXE YYP YZZ ZCA ZCG ZL0 ZZTAW ~IA ~WP ABXSQ AABNI AAHKB ADACV H13 HGLYW IPSME OIG PQBZA AAYXX CITATION |
| ID | FETCH-LOGICAL-c4867-52b5f330a7aa0261569876f4907207e39e5f8bb39e1e98a9607401be75aa1e9a3 |
| IEDL.DBID | DR2 |
| ISSN | 0022-2879 |
| IngestDate | Fri Aug 23 01:47:31 EDT 2024 Sat Aug 24 01:17:59 EDT 2024 Fri Feb 02 07:02:39 EST 2024 Wed Jan 17 05:04:54 EST 2024 |
| IsDoiOpenAccess | false |
| IsOpenAccess | true |
| IsPeerReviewed | true |
| IsScholarly | true |
| Issue | s1 |
| Language | English |
| LinkModel | DirectLink |
| MergedId | FETCHMERGED-LOGICAL-c4867-52b5f330a7aa0261569876f4907207e39e5f8bb39e1e98a9607401be75aa1e9a3 |
| Notes | ArticleID:JMCB337 istex:FF35FE2175A6E42D29BDC040B9E45DCB265E7D1A ark:/67375/WNG-VNKHHTLV-8 This a revised and updated version of a speech held on June 4, 2009, at the conference “Financial Markets and Monetary Policy,” Federal Reserve Board. The views expressed here are my own and are not necessarily shared by other members of the Riksbank's Executive Board or staff. I thank Meredith Beechey for comments. Carl‐Andreas Claussen, Megan Owens, and Per Åsberg‐Sommar have contributed to this speech. |
| OpenAccessLink | https://onlinelibrary.wiley.com/doi/pdfdirect/10.1111/j.1538-4616.2010.00337.x |
| PageCount | 14 |
| ParticipantIDs | crossref_primary_10_1111_j_1538_4616_2010_00337_x wiley_primary_10_1111_j_1538_4616_2010_00337_x_JMCB337 jstor_primary_40784970 istex_primary_ark_67375_WNG_VNKHHTLV_8 |
| PublicationCentury | 2000 |
| PublicationDate | September 2010 |
| PublicationDateYYYYMMDD | 2010-09-01 |
| PublicationDate_xml | – month: 09 year: 2010 text: September 2010 |
| PublicationDecade | 2010 |
| PublicationPlace | Malden, USA |
| PublicationPlace_xml | – name: Malden, USA |
| PublicationTitle | Journal of money, credit and banking |
| PublicationYear | 2010 |
| Publisher | Blackwell Publishing Inc Wiley Periodicals Incorporated |
| Publisher_xml | – name: Blackwell Publishing Inc – name: Wiley Periodicals Incorporated |
| References | Krugman, Paul R. (1998) "It's Baaack: Japan's Slump and the Return of the Liquidity Trap. Brookings Papers on Economic Activity, 2, 137-205. Beechey, Meredith, and Heidi Elmér. (2009) "The Lower Limit of the Riksbank's Repo Rate. Sveriges Riksbank Economic Commentaries, 11, 1-8. http://www.riksbank.com. Svensson, Lars E.O. (2010b) "Policy Expectations and Policy Evaluations: The Role of Transparency and Communication. Sveriges Riksbank Economic Review, 1, 43-78. Svensson, Lars E.O. (2009) "Transparency under Flexible Inflation Targeting: Experiences and Challenges. Sveriges Riksbank Economic Review, 1, 5-44. Svensson, Lars E.O. (2003) "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others. Journal of Economic Perspectives, 17, 145-66. 2009 Vols. 3a and 3b 2009; 11 2010b; 1 2010a 2003; 17 1998; 2 2009; 1 Svensson Lars E.O. (e_1_2_6_10_1) Beechey Meredith (e_1_2_6_3_1) 2009; 11 e_1_2_6_8_1 e_1_2_6_5_1 Svensson Lars E.O. (e_1_2_6_9_1) 2010; 1 e_1_2_6_4_1 e_1_2_6_6_1 e_1_2_6_2_1 Svensson Lars E.O. (e_1_2_6_7_1) 2009; 1 |
| References_xml | – year: 2009 – year: 2010a – volume: 1 start-page: 43 year: 2010b end-page: 78 article-title: Policy Expectations and Policy Evaluations: The Role of Transparency and Communication publication-title: Sveriges Riksbank Economic Review – volume: 1 start-page: 5 year: 2009 end-page: 44 article-title: Transparency under Flexible Inflation Targeting: Experiences and Challenges publication-title: Sveriges Riksbank Economic Review – volume: Vols. 3a and 3b – volume: 11 start-page: 1 year: 2009 end-page: 8 article-title: The Lower Limit of the Riksbank's Repo Rate publication-title: Sveriges Riksbank Economic Commentaries – volume: 2 start-page: 137 year: 1998 end-page: 205 article-title: It's Baaack: Japan's Slump and the Return of the Liquidity Trap publication-title: Brookings Papers on Economic Activity – volume: 17 start-page: 145 year: 2003 end-page: 66 article-title: Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others publication-title: Journal of Economic Perspectives – volume: 1 start-page: 5 year: 2009 ident: e_1_2_6_7_1 article-title: Transparency under Flexible Inflation Targeting: Experiences and Challenges publication-title: Sveriges Riksbank Economic Review contributor: fullname: Svensson Lars E.O. – volume: 1 start-page: 43 year: 2010 ident: e_1_2_6_9_1 article-title: Policy Expectations and Policy Evaluations: The Role of Transparency and Communication publication-title: Sveriges Riksbank Economic Review contributor: fullname: Svensson Lars E.O. – ident: e_1_2_6_5_1 doi: 10.2307/2534694 – ident: e_1_2_6_6_1 doi: 10.1257/089533003772034934 – ident: e_1_2_6_2_1 – volume-title: Handbook of Monetary Economics ident: e_1_2_6_10_1 contributor: fullname: Svensson Lars E.O. – volume: 11 start-page: 1 year: 2009 ident: e_1_2_6_3_1 article-title: The Lower Limit of the Riksbank's Repo Rate publication-title: Sveriges Riksbank Economic Commentaries contributor: fullname: Beechey Meredith – ident: e_1_2_6_4_1 doi: 10.2139/ssrn.1440289 – ident: e_1_2_6_8_1 |
| SSID | ssj0009541 |
| Score | 2.026603 |
| Snippet | I discuss what determines the effective lower bound (ELB) for the policy rate and argue that the ELB is not hard, but rather soft, and that it is probably... |
| SourceID | crossref wiley jstor istex |
| SourceType | Aggregation Database Publisher |
| StartPage | 229 |
| SubjectTerms | Central banks DISCUSSIONS E43 E52 E58 Economic expectations Environmental policy Financial markets Government expenditures Inflation rates Interest rates Monetary policy Nominal interest rates Repurchase agreement zero lower bound |
| Title | Monetary Policy and Financial Markets at the Effective Lower Bound |
| URI | https://api.istex.fr/ark:/67375/WNG-VNKHHTLV-8/fulltext.pdf https://www.jstor.org/stable/40784970 https://onlinelibrary.wiley.com/doi/abs/10.1111%2Fj.1538-4616.2010.00337.x |
| Volume | 42 |
| hasFullText | 1 |
| inHoldings | 1 |
| isFullTextHit | |
| isPrint | |
| link | http://utb.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwrV1LT8JAEJ4YTNSLD5RYX9mD8VbSsrt9HIWIBIGDAeS22S3bCwkxUhLir3empQSMB2M8tWm63e7Mzu5M-803APcm4SKwInbDwLOuSITvRjxtuLjTR4lvpEwTyh3uD4LOSHQncrLGP1EuTMEPsfngRpaRr9dk4Nosdo2cjFUEflAitDgP6-RPEq8e-UevjS3-XeGXxOEYJMS7oJ4fH7SzU-2T0FclaHHXk823ovYJzMpBFAiUWX2ZmXry-Y3f8X9GeQrHa4-VPRZT7Az27LwKByVgvgqHZW7z4hyauETYDHtjBd8w0_Mpa5ekHqyfp1gvmM4Y-p2sYE7G5Zb1qFYba1KJpwsYtZ-GrY67rtLgJsTWh5GskSnnng61poBOBjGusKnAqLvhhZbHVqaRMXj0bRxpjJioCKCxodQar2heg8ocX-4SWOylOgpkI068qfBSgoxyawXGqIng3tQ44JcaUe8FGYfaCmJQUIoEpUhQKheUWjnwkKtu0wBHSmC2UKq3wbMaD146nWFvrCIHarluNzfSH04Rh54DQa6hX3epuv1WE8-u_trwGo4KkAJB2W6gkn0s7S36Ppm5y2f1FyaV8Jw |
| link.rule.ids | 315,786,790,1382,27955,27956,46327,46751 |
| linkProvider | Wiley-Blackwell |
| linkToHtml | http://utb.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwrV1LT8MwDLbQJgEX3ojxzAFx69QuSR9HNhhlbDugMbhFSZdeQBNinTTx67HbddoQB4Q4taqatrHjxE4_fwa4NAkXvhWRE_iudUQiPCfkacPBlT5MPCNlmlDucK_vx0-i8yJf5uWAKBem4IdYbLiRZeTzNRk4bUivWjlZq_A9v4RocR7U0aGsovVLstKbx8YSA6_wSupwDBOiVVjPj09aWauqJPZZCVtc9WXzxai9DW9lNwoMymt9mpl68vmN4fGf-rkDW3OnlV0Xo2wX1ux4D9ZLzPwebJTpzZN9aOIsYTN8HSsoh5kej1i75PVgvTzLesJ0xtD1ZAV5Ms64rEvl2liTqjwdwFP7dtCKnXmhBichwj4MZo1MOXd1oDXFdNKPcJJNBQbeDTewPLIyDY3Bo2ejUGPQRHUAjQ2k1nhF80OojPHjjoBFbqpDXzaixB0JNyXUKLdWYJiaCO6OTA28UiXqveDjUEtxDApKkaAUCUrlglKzGlzluls0wJ4Sni2Q6rl_p4b9hzgedIcqrMFhrtzFjfSTU0SBWwM_V9GvX6k6vVYTz47_2vACNuJBr6u69_2HE9gsMAuEbDuFSvYxtWfoCmXmPB_iX2Zs9Lw |
| linkToPdf | http://utb.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwrV1LS8NAEB7EQvXiW6zPPYi3lCT7SHK0aq19IeLrtuymm4tQRCMUf70zSVNa8SDiKSFks9mZnd2Z5JtvAE5tyoVyIvEi5TtPpCLwYp6FHu70cRpYKbOUcocHQ9V5EN1n-TzFP1EuTMkPMfvgRpZRrNdk4K-jbNHIyViFClSF0OI8aqI_WROKhxSIXd6FcwS8IqiYwzFKSBZRPT8-aWGrqpHUJxVqcdGVLfai9jq8VKMoISgvzY_cNtPPbwSP_zPMDVibuqzsvJxjm7DkxltQrxDzW7BSJTe_b0ML1wiXY2-sJBxmZjxi7YrVgw2KHOt3ZnKGjicrqZNxvWV9KtbGWlTjaQce2lf3Fx1vWqbBS4muD0NZKzPOfRMZQxGdVAkusZnAsDv0I8cTJ7PYWjwGLokNhkxUBdC6SBqDVwzfheUxvtwesMTPTKxkmKT-SPgZYUa5cwKD1FRwf2QbEFQa0a8lG4eei2JQUJoEpUlQuhCUnjTgrFDdrAGOlNBskdRPw2v9OOx1Ovf9Rx03YLfQ7exG-sUpkshvgCo09OsudXdw0cKz_b82PIH67WVb92-GvQNYLQELBGs7hOX87cMdoR-U2-Nign8BddXzaw |
| openUrl | ctx_ver=Z39.88-2004&ctx_enc=info%3Aofi%2Fenc%3AUTF-8&rfr_id=info%3Asid%2Fsummon.serialssolutions.com&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.atitle=Monetary+Policy+and+Financial+Markets+at+the+Effective+Lower+Bound&rft.jtitle=Journal+of+money%2C+credit+and+banking&rft.au=SVENSSON%2C+LARS+E.O.&rft.date=2010-09-01&rft.issn=0022-2879&rft.eissn=1538-4616&rft.volume=42&rft.issue=s1&rft.spage=229&rft.epage=242&rft_id=info:doi/10.1111%2Fj.1538-4616.2010.00337.x&rft.externalDBID=n%2Fa&rft.externalDocID=10_1111_j_1538_4616_2010_00337_x |
| thumbnail_l | http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/lc.gif&issn=0022-2879&client=summon |
| thumbnail_m | http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/mc.gif&issn=0022-2879&client=summon |
| thumbnail_s | http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/sc.gif&issn=0022-2879&client=summon |