Belgibayeva, Adiya and Horvath, M. (2017) Real rigidities and optimal stabilization at the Zero Lower Bound in New Keynesian economies. Working Paper. Birkbeck College, University of London, London, UK.
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Abstract
The paper re-visits the literature on real rigidities in New Keynesian models in the context of an economy at the zero lower bound. It identifies strategic interaction among price- and wage-setting agents in the economy as an important determinant of both optimal policy and economic dynamics in deep recessions. In particular, labour market segmentation is shown to have a significant influence on the length of the forward commitment to keep interest rates at zero, the magnitude of the fiscal policy responses as well as inflation volatility in the economy under optimal policy.
Metadata
| Item Type: | Monograph (Working Paper) |
|---|---|
| Additional Information: | ISSN 1745-8587: BWPEF 1701 |
| Keyword(s) / Subject(s): | zero lower bound, strategic complementarity, labour market, inflation, income tax, government spending. |
| School: | Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School |
| Depositing User: | Administrator |
| Date Deposited: | 04 Jul 2017 10:25 |
| Last Modified: | 02 Aug 2023 17:33 |
| URI: | https://eprints.bbk.ac.uk/id/eprint/19114 |
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