Credible commitment to optimal escape from a liquidity trap
Subtitle: the role of the balance sheet of an independent central bank
By: Olivier Jeanne, Lars E.O. Svensson.
Contributors: Svensson, Lars E. O.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10679; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10679.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Banks and banking, Central.; Bank liquidity.
Description: "An independent central bank can manage its balance sheet and its capital so as to commit itself to a depreciation of its currency and an exchange-rate peg.  This way, the central bank can implement the optimal escape from a liquidity trap, which involves a commitment to higher future inflation.  This commitment mechanism works even though, realistically, the central bank cannot commit itself to a particular future money supply.  It supports the feasibility of Svensson's Foolproof Way to escape from a liquidity trap"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.