Metadata record for Replication data for: Monetary Policy Strategies for a Low-Rate Environment
116485
Inter-university Consortium for Political and Social Research
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V1
Replication data for: Monetary Policy Strategies for a Low-Rate Environment
116485
http://doi.org/10.3886/E116485V1
Ben S. Bernanke
Michael T. Kiley
John M. Roberts
Please see full citation.
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Ann Arbor, MI: Inter-university Consortium for Political and Social Research
Bernanke, Ben S., Kiley, Michael T., and Roberts, John M. Replication data for: Monetary Policy Strategies for a Low-Rate Environment. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116485V1
E43 Interest Rates: Determination, Term Structure, and Effects
E52 Monetary Policy
E58 Central Banks and Their Policies
In low-rate environments, policy strategies that involve holding rates "lower for longer" (L4L) may mitigate the effects of the effective lower bound (ELB). However, these strategies work in part by managing the public's expectations, which is not always realistic. Using the Fed's large-scale macroeconometric model, we study the effectiveness of L4L policies when financial market participants are forward-looking but other agents are not. We find that the resulting limited ability to manage expectations reduces but does not eliminate the advantages of L4L policies. The best policies provide adequate stimulus at the ELB while avoiding sizable overshoots of inflation and output.