The zero lower bound and monetary policy in a global economy: A simple analytical investigation

Ippei Fujiwara, Nao Sudo, Yuki Teranishi

    Research output: Contribution to journalArticle

    Abstract

    How should monetary policy cooperation be designed when more than one country is simultaneously facing zero lower bounds on nominal interest rates? To answer this question, we examine monetary policy cooperation with both optimal discretion and commitment policies in a two-country model. We reach the following conclusions. Under discretion, monetary policy cooperation is characterized by the intertemporal elasticity of substitution (IES), a key parameter measuring international spillovers, and no history dependency. On the other hand, under commitment, monetary policy featureshistory dependence with international spillover effects
    Original languageEnglish
    Pages (from-to)103-134
    JournalInternational Journal of Central Banking
    Volume6
    Issue number1
    Publication statusPublished - 2010

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