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This paper examines the role of financial market imperfections for output reactions to nominal interest rate shocks. Empirical evidence shows a hump-shaped impulse response function of output and suggests that credit supply co-moves with output. A monetary business cycle model with staggered...
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This paper characterizes the optimal inflation buffer consistent with a zero lower bound on nominal interest rates in a … inflation inertia would significantly underestimate the inflation buffer. If the central bank follows the prescriptions of a …
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delay in the response of the rate of inflation to a monetary shock. This paper shows that an optimizing monetary model with … of both output and inflation to an interest rate shock when taking into account a time-to-build requirement for …
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