New answers tagged fiscal-policy
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Given that several central banks have negative interest rates today, the idea of ZLB seems clearly flawed, but brings up a useful point: Interest rates also reflect risk as well as value of money. Losing a little bit of money through negative rates can be seen as preferable to losing a lot of money through risky investment, or tying up funds so they can't be ...
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An excellent overview of not just monetarist view on this issue but all other mainstream views on monetary policy at zero lower bound (ZLB) can be found in Ullersma (2002) The Zero Lower Bound on Nominal Interest Rates and Monetary Policy Effectiveness: a Survey - which is an excellent literature review on this subject (albeit slightly dated).
In short, ...
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