Why economies fall into liquidity traps?

2015 Fiscal Year Final Research Report

• Project/Area Number: 24730241
• Research Category: Grant-in-Aid for Young Scientists (B)
• Allocation Type: Multi-year Fund
• Research Field: Economic policy
• Research Institution: Tokyo Metropolitan University (2014-2015); Shinshu University (2012-2013)
• Principal Investigator: Arato Hiroki 首都大学東京, 社会(科)学研究科, 准教授 (90583518)
• Project Period (FY): 2012-04-01 – 2016-03-31
• Keywords: 流動性の罠 / 金融政策 / 情報の不完全性 / 量的緩和政策

Outline of Final Research Achievements

I consider causes and an optimal policy under the ``liquidity trap", in which a nominal interest rate reaches a zero lower bound. I find that a probability of falling into the trap rises with a financial friction. I also find that central banks should stabilize output more strongly in an endogenous growth model.
Moreover, I find that the macroeconomic model with an foreign exchange market microstructure is needed for studies on the liquidity trap.

Free Research Field

マクロ経済学