Zero lower bound on interest rates

[Javier Gómez]

Hello all,

Any hint about how could I write a code with a mechanism to scape from
the zero lower bound on interest rates?

Best regards,

Javier

[Jaromir Benes]

Hi Javier

As we discussed earlier, we could try and write a small open economy model with a stylized sterilized intervention mechanism in the UIP that would trigger depreciation through portfolio balance effect (and hence upward inflationary expectations) whenever the interest rates are at zero.

Best

Jaromir

[Goya]

Hi all,

I am also interested in the issue. Jaromir, are you talking about
linear model?

Adam

[Jaromir Benes]

Hi,

it'd be a linear model with one non-linearity - the policy rule, which would obviously kick in only at times when interest rates reach zero. At all other times, it'd be a standard linear model.

Jaromir

[Goya]

Hi all,

Mirek, could you be more specific about the implementation. There
would be some if condition for MP rule?

Adam

[Jaromir Benes]

Yup (you need to wrap it up in an m-file function referred to in the model code, but that's the idea...)

J.

[Javier Gómez]

Thanks!

2011/10/11 Jaromir Benes <jaromi...@gmail.com>

Yup (you need to wrap it up in an m-file function referred to in the model code, but that's the idea...)

J.

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