Talk:Zero lower bound

Dr. Gimenez-Gomez's comment on this article

Dr. Gimenez-Gomez has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Add this comments and references:

http://krugman.blogs.nytimes.com/2009/01/17/zero-lower-bound-blogging/?_r=1

Simple Analytics of the Government Expenditure Multiplier by Michael Woodford (2010)

http://krugman.blogs.nytimes.com/2012/09/25/coulda-been-worse/

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Dr. Gimenez-Gomez has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference 1: Jose M. Jimenez Gomez & Josep Enric Peris Ferrando, 2012. "Fair bound based solidarity," Working Papers. Serie AD 2012-18, Instituto Valenciano de Investigaciones Economicas, S.A. (Ivie).

• Reference 2: Jose M. Jimenez Gomez, 2010. "Why people reach intermediate agreements? Axiomatic and strategic justifications," Working Papers. Serie AD 2010-29, Instituto Valenciano de Investigaciones Economicas, S.A. (Ivie).

ExpertIdeasBot (talk) 18:56, 27 June 2016 (UTC)

Dr. Robinson's comment on this article

Dr. Robinson has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

(1)

The root cause of the ZLB is the issuance of paper currency by governments, effectively guaranteeing a zero nominal interest rate and acting as an interest rate floor. Miles Kimball suggested that a modern economy either fully relying on electronic money or defining electronic money as the unit of account could eliminate the ZLB.[1]

Add a reference to negative interest rates on excess reserves:

The root cause of the ZLB is the issuance of paper currency by governments, effectively guaranteeing a zero nominal interest rate and acting as an interest rate floor. Miles Kimball suggested that a modern economy either fully relying on electronic money or defining electronic money as the unit of account could eliminate the ZLB.[1] Some central banks, such as the Bank of Japan, have introduced negative interest rates on excess reserves held by commercial banks at the central bank. The purpose of this policy is to encourage lending.

(2) The problem of the ZLB returned to prominence with Japan's experience during the 90's, and more recently with the subprime crisis. The belief that monetary policy under the ZLB was effective in promoting economy growth has been critiqued by Paul Krugman, Gauti Eggertsson, and Michael Woodford among others.

This paragraph is ambiguous. An alternative, emphasising the role of expectations and adding a link to forward guidance:

The conduct of monetary policy at the ZLB has been studied by Paul Krugman, Gauti Eggertsson, and Michael Woodford, among others. Such studies often highlight the importance of the central bank influencing expectations about the future conduct of monetary policy when at the ZLB in order to be more expansionary today. Forward guidance, as implemented by the U.S. Federal Reserve and other central banks as a result of the subprime crisis, is motivated by this idea.

(3)

Milton Friedman, on the other hand, argued that a zero nominal interest rate presents no problem for monetary policy. According to Friedman, a central bank can increase the monetary base even if the interest rate vanishes; it only needs to continue buying bonds.[2] Friedman also coined the term "helicopter drops" to illustrate how central banks could always generate spending and inflation. Friedman used the example of a helicopter flying over a town dropping dollar bills from the sky, which households then gathered in perfectly equal shares. Economists have argued that real-world versions of this idea would work at the zero lower bound. Typically, helicopter drops have been interpreted as involving the central bank directly financing the budget deficit. [3]

Add link to quantitative easing and a comment on the need for policy coordination.

Milton Friedman, on the other hand, argued that a zero nominal interest rate presents no problem for monetary policy. According to Friedman, a central bank can increase the monetary base even if the interest rate vanishes; it only needs to continue buying bonds.[2] Such a policy is an example of quantitative easing. Friedman also coined the term "helicopter drops" to illustrate how central banks could always generate spending and inflation. Friedman used the example of a helicopter flying over a town dropping dollar bills from the sky, which households then gathered in perfectly equal shares. Economists have argued that real-world versions of this idea would work at the zero lower bound. Typically, helicopter drops have been interpreted as involving the central bank directly financing the budget deficit. [3] Implementing such a policy would require a considerable degree of coordination between the fiscal authority and the central bank.

(4)

Add links to forward guidance and quantitative easing in the 'See also' section.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Robinson has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Mariano Kulish & James Morley & Tim Robinson, 2014. "Estimating DSGE models with forward guidance," Discussion Papers 2014-32A, School of Economics, The University of New South Wales.

ExpertIdeasBot (talk) 16:45, 2 August 2016 (UTC)