Economic policy when interest rates are zero. This Project studies economic policy when interest rates are zero. Low interest rate environments constrain monetary policy because central banks cannot lower rates to raise demand. We exploit recent international experience with zero rates to understand why new policies have had mixed success. We argue different outcomes across countries arise because of different degrees of credibility and familiarity with new policy initiatives. We provide empiric ....Economic policy when interest rates are zero. This Project studies economic policy when interest rates are zero. Low interest rate environments constrain monetary policy because central banks cannot lower rates to raise demand. We exploit recent international experience with zero rates to understand why new policies have had mixed success. We argue different outcomes across countries arise because of different degrees of credibility and familiarity with new policy initiatives. We provide empirical support for this view and study the consequences of imperfectly credible policy. We characterize how monetary policy (conventional and unconventional) and fiscal policy can be used to greatest effect in low interest rate environments and quantify the welfare implications for Australia. Read moreRead less
Implications of Global Economic Forces for Domestic Monetary Policy. The project aims to quantify and understand the extent to which international factors affect key macroeconomic variables such as inflation and interest rates in open economies. The aims will be achieved through the development and application of new macroeconomic and econometric models. Expected outcomes are new insights and policy recommendations on how to appropriately conduct monetary policy for an open economy such as Austr ....Implications of Global Economic Forces for Domestic Monetary Policy. The project aims to quantify and understand the extent to which international factors affect key macroeconomic variables such as inflation and interest rates in open economies. The aims will be achieved through the development and application of new macroeconomic and econometric models. Expected outcomes are new insights and policy recommendations on how to appropriately conduct monetary policy for an open economy such as Australia. This should provide significant benefits to the broader Australian economy through the conduct of suitable policy by institutions such as the Reserve Bank of Australia.Read moreRead less