Replication data for: Liquidity Traps and Jobless Recoveries

Principal Investigator(s): View help for Principal Investigator(s) Stephanie Schmitt-Grohé; Martín Uribe

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MAC2015-0220_data			10/12/2019 08:07:PM
LICENSE.txt	text/plain	14.6 KB	10/12/2019 04:07:PM

Project Citation:

Schmitt-Grohé, Stephanie, and Uribe, Martín. Replication data for: Liquidity Traps and Jobless Recoveries. Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114127V1

Project Description

Summary: This paper proposes a model that explains the joint occurrence of liquidity traps and jobless growth recoveries. Its key elements are downward nominal wage rigidity, a Taylor-type interest rate feedback rule, the zero lower bound on nominal interest rates, and a confidence shock. Absent a change in policy, the model predicts that low inflation and high unemployment become chronic. With capital accumulation, the model predicts, in addition, an investment slump. The paper identifies a New Fisherian effect, whereby raising the nominal interest rate to its intended target for an extended period of time can boost inflationary expectations and thereby foster employment.

Scope of Project

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E31 Price Level; Inflation; Deflation
      E32 Business Fluctuations; Cycles
      E43 Interest Rates: Determination, Term Structure, and Effects
      E52 Monetary Policy
      F44 International Business Cycles
      G01 Financial Crises

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Published Versions

V1 [2019-10-12]

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DDI 2.5

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