Title: Credible commitment to optimal escape from a liquidity trap
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.
Subjects: Bank liquidity, Central Banks and banking, Deflation (Finance), Econometric models, Interest rates