(Dis)Solving the Zero Lower Bound Equilibrium through Income Policy

B-Tier
Journal: Journal of Money, Credit, and Banking
Year: 2022
Volume: 54
Issue: 2-3
Pages: 519-535

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We investigate the possibility to reflate an economy experiencing a long‐lasting zero lower bound episode with subdued or negative inflation by imposing a minimum level of wage inflation. The income policy under investigation is formalized as a downward nominal wage growth rigidity, such that wage inflation cannot be lower than a fraction of the inflation target. This policy allows dissolving the zero lower bound steady‐state equilibrium in an Overlapping Generations (OLG) model featuring “secular stagnation” and in an infinite‐life model, where this equilibrium emerges due to deflationary expectations.

Technical Details

RePEc Handle
repec:wly:jmoncb:v:54:y:2022:i:2-3:p:519-535
Journal Field
Macro
Author Count
2
Added to Database
2026-01-24