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The zero lower bound (ZLB) or zero nominal lower bound (ZNLB) is a macroeconomic problem that occurs when the short-term nominal interest rate is at or near zero, causing a liquidity trap and limiting the central bank's capacity to stimulate economic growth.
US inflation rates. Zero interest-rate policy (ZIRP) is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan and in the United States from December 2008 through December 2015 and again from March 2020 until March 2022 amid the COVID-19 pandemic.
Monetary policy instruments are used for managing short-term rates (the federal funds rate and discount rates in the U.S.), and changing reserve requirements for commercial banks. Monetary policy can be either expansive for the economy (short-term rates low relative to the inflation rate ) or restrictive for the economy (short-term rates high ...
A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt (financial instrument) which yields so low a rate of interest."
Monetary policy rules targeting properly measured monetary aggregates may better characterize central bank actions, particularly during recessions and zero lower bound periods [69]. In 2022, the International Monetary Fund registered that 25 economies, all of them emerging economies, used some monetary aggregate target as their monetary policy ...
Many economists subscribe to a consensus view in which monetary policy is preferred as a means of regulating the business cycle, and fiscal stimulus is regarded as effective only in circumstances in which monetary policy has become ineffective, because policy interest rates are approaching the zero lower bound or a liquidity trap has developed ...
In finance, the yield curve is a graph which depicts how the yields on debt instruments – such as bonds – vary as a function of their years remaining to maturity. [ 1 ] [ 2 ] Typically, the graph's horizontal or x-axis is a time line of months or years remaining to maturity, with the shortest maturity on the left and progressively longer ...
A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.