Published in:National Bank of Poland Working Paper ; No. 230
Extent:
1 Online-Ressource (23 p)
Language:
English
DOI:
10.2139/ssrn.2804952
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 13, 2016 erstellt
Description:
This paper compares the consequences of hitting the zero lower bound in small open and large closed economies. I construct a two-economy New Kenynesian model and calibrate it so that one economy is small and open and the second large and closed. Then I conduct a number of experiments assuming that the zero lower bound binds for one or the other economy. At the ZLB bad shocks are amplified and good shocks dampened. I show that this modifications are much stronger in the large than in the small economy. As a result the large economy may suffer more at the ZLB