Optimal Monetary Policy at the Zero-Interest-Rate Bound

# Optimal Monetary Policy at the Zero-Interest-Rate Bound > OpenAlex Metadata Hub · https://openalex.org/W2005679363 ## Bibliographic - **DOI:** 10.1353/mcb.2005.0053 - **Year:** 2005 - **Citations:** 326 - **Open Access:** No (closed) - **License:** — - **Source:** https://doi.org/10.1353/mcb.2005.0053 ## Authors - Taehun Jung - Yuki Teranishi - Tsutomu Watanabe ## Abstract What should a central bank do when faced with a weak aggregate demand even after reducing the short-term nominal interest rate to zero? To address this question, we solve a central bank's intertemporal loss-minimization problem, in which the non-negativity constraint on nominal interest rates is explicitly considered. We find that the optimal path is characterized by policy inertia, in the sense that a zero interest rate policy should be continued for a while even after the natural rate of interest returns to a positive level. By making such a commitment, the central bank is able to achieve higher expected inflation, lower long-term nominal interest rates, and a weaker domestic currency in the adverse periods when the natural rate of interest significantly deviates from a steady-state level. ## Keywords Zero lower bound, Nominal interest rate, Interest rate, Economics, Fisher hypothesis, Monetary policy, Monetary economics, Inflation (cosmology), Constraint (computer-aided design), International Fisher effect, Zero (linguistics), Forward guidance, Currency, Aggregate demand, Econometrics, Real interest rate, Inflation targeting, Credit channel, Mathematics ## Concepts - Zero lower bound - Nominal interest rate - Interest rate - Economics - Fisher hypothesis - Monetary policy - Monetary economics - Inflation (cosmology) - Constraint (computer-aided design) - International Fisher effect - Zero (linguistics) - Forward guidance - Currency - Aggregate demand - Econometrics - Real interest rate - Inflation targeting - Credit channel - Mathematics - Geometry - Philosophy - Physics - Theoretical physics - Linguistics --- *Metadata only — full text not imported unless Open Access license permits.*

Bài “Optimal Monetary Policy at the Zero-Interest-Rate Bound” được TradingBase chuyển thành Knowledge Product cho trader — không phải trang đọc abstract OpenAlex. Tóm lược học thuật (đã diễn giải): What should a central bank do when faced with a weak aggregate demand even after reducing the short-term nominal interest rate to zero? To address this question, we solve a central bank's intertemporal loss-minimization problem, in which the non-negativity constraint on nominal interest rates is explicitly considered. We find that the optimal path is characterized by policy inertia, in the sense that a zero interest rate policy should be continued for a while even after the natural rate of interest returns to a positive level. By making such a commitment, the central bank is able to achieve higher expected inflation, lower long-term nominal interest rates, and a weaker domestic currency in the adverse periods when the natural rate of interest significantly deviates from a steady-state level. Phần Trading Insights bên dưới nối nghiên cứu với Forex, vàng, USD, lãi suất và risk regime — để bạn đưa vào journal và playbook. Metadata DOI/OA chỉ là rail tham chiếu; nội dung chính là summary, takeaways và ứng dụng thị trường do Content Factory sinh.