Zero Nominal Interest Rates, Unemployment, Excess Reserves and Deflation in a Liquidity Trap

23 Pages Posted: 3 Apr 2012

See all articles by Ryu‐ichiro Murota

Ryu‐ichiro Murota

affiliation not provided to SSRN

Yoshiyasu Ono

Osaka University - Institute of Social and Economic Research (ISER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2012

Abstract

We present a dynamic monetary model that consistently explains various phenomena such as unemployment, deflation, zero nominal interest rates and excess reserves held by commercial banks. These phenomena were observed during the Great Depression in the USA, the recent long‐run stagnation in Japan and the recent depression triggered by the subprime loan problem in the USA. We show that an excessive liquidity preference leads to a liquidity trap and thereby generates the phenomena.

Suggested Citation

Murota, Ryu‐ichiro and Ono, Yoshiyasu, Zero Nominal Interest Rates, Unemployment, Excess Reserves and Deflation in a Liquidity Trap (May 2012). Metroeconomica, Vol. 63, Issue 2, pp. 335-357, 2012. Available at SSRN: https://ssrn.com/abstract=2033560 or http://dx.doi.org/10.1111/j.1467-999X.2011.04142.x

Ryu‐ichiro Murota (Contact Author)

affiliation not provided to SSRN

No Address Available

Yoshiyasu Ono

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Register to save articles to
your library

Register

Paper statistics

Downloads
2
Abstract Views
333
PlumX Metrics