Liquidity Trap and Excessive Leverage

Liquidity Trap and Excessive Leverage
We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand. However, if the fall in the interest rate is limited... READ MORE...

Publication date: July 2014
ISBN 9781498370943
$18.00

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