Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 24, 2020 erstellt
Beschreibung:
We study monetary policy in a model where long-term interest rate variability dampens the fiscal multiplier. A fixed money supply limits this variability. Moreover, a flexible money supply rule that only responds to government spending, and is otherwise fixed, further amplifies the fiscal multiplier and improves household welfare. Yield curve control, or reserve management by the central bank to reduce long-term rate variability, is most effective when the money supply responds endogenously to support a Taylor rule interest rate policy. In the fixed and flexible money supply cases, there is limited fiscal multiplier amplification at the zero lower bound