Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank
Central banks target CPI inflation; independent central banks are concerned about their balance sheet and the level of their capital. The first fact makes it difficult for a central bank to implement the optimal escape from a liquidity trap, because it undermines a commitment to overshoot the inflat...
Gespeichert in:
| Veröffentlicht in: | The American economic review 2007-03, Vol.97 (1), p.474-490 |
|---|---|
| Hauptverfasser: | , |
| Format: | Artikel |
| Sprache: | eng |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
| container_end_page | 490 |
|---|---|
| container_issue | 1 |
| container_start_page | 474 |
| container_title | The American economic review |
| container_volume | 97 |
| creator | Jeanne, Olivier Svensson, Lars E. O |
| description | Central banks target CPI inflation; independent central banks are concerned about their balance sheet and the level of their capital. The first fact makes it difficult for a central bank to implement the optimal escape from a liquidity trap, because it undermines a commitment to overshoot the inflation target. We show that the second fact provides a solution. Capital concerns provide a mechanism for an independent central bank to commit to inflate ex post. The optimal policy can take the form of a currency depreciation combined with a crawling peg, a policy advocated by Svensson as the “Foolproof Way” to escape from a liquidity trap. (JEL E31, E52, E58, E62) |
| doi_str_mv | 10.1257/aer.97.1.474 |
| format | Article |
| fullrecord | <record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_journals_233020642</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><sourcerecordid>1238511961</sourcerecordid><originalsourceid>FETCH-LOGICAL-c397t-5350acc01282f7015634c2c52daa043a02a5719d1bef56474a68022c028e74d73</originalsourceid><addsrcrecordid>eNotUMtOwzAQtBBIlMKND7A4k-BX4oQbjQpUqlQJytnaOhs1pYlTxz3073FVLvvS7MzOEvLIWcpFpl8AfVrqlKdKqysy4aVSiS4Lfk0mjDGRFKIQt-RuHHfs3HM9IafKY91u9kgr13Vt6LAPNDi6GkLbwZ7ORwsD0sa7jgJdtodjW7fhRNcehle63iL9cnHZNTTEegZ76C3S7y1iOA-hp4u-xgFjiMRVDD6yzqD_vSc3DexHfPjPU_LzPl9Xn8ly9bGo3paJlaUOSSYzBtYyHm9vNONZLpUVNhM1AFMSmIBM87LmG2yyPBqHvGBCWCYK1KrWckqeLryDd4cjjsHs3NH3UdIIKZlguRIR9HwBWe_G0WNjBh_9-5PhzJx_a-JvTakNN1FC_gHUKGtS</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>233020642</pqid></control><display><type>article</type><title>Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank</title><source>EBSCOhost Business Source Complete</source><source>JSTOR Archive Collection A-Z Listing</source><source>American Economic Association Web</source><creator>Jeanne, Olivier ; Svensson, Lars E. O</creator><creatorcontrib>Jeanne, Olivier ; Svensson, Lars E. O</creatorcontrib><description>Central banks target CPI inflation; independent central banks are concerned about their balance sheet and the level of their capital. The first fact makes it difficult for a central bank to implement the optimal escape from a liquidity trap, because it undermines a commitment to overshoot the inflation target. We show that the second fact provides a solution. Capital concerns provide a mechanism for an independent central bank to commit to inflate ex post. The optimal policy can take the form of a currency depreciation combined with a crawling peg, a policy advocated by Svensson as the “Foolproof Way” to escape from a liquidity trap. (JEL E31, E52, E58, E62)</description><identifier>ISSN: 0002-8282</identifier><identifier>EISSN: 1944-7981</identifier><identifier>DOI: 10.1257/aer.97.1.474</identifier><identifier>CODEN: AENRAA</identifier><language>eng</language><publisher>Nashville: American Economic Association</publisher><subject>Balance sheets ; Capital losses ; Central banks ; Consumer Price Index ; Credibility ; Deficit financing ; Foreign exchange rates ; Inflation ; Interest rates ; Liquidity ; Monetary policy ; Price levels ; Reserve assets ; Studies ; Taxation</subject><ispartof>The American economic review, 2007-03, Vol.97 (1), p.474-490</ispartof><rights>Copyright American Economic Association Mar 2007</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c397t-5350acc01282f7015634c2c52daa043a02a5719d1bef56474a68022c028e74d73</citedby><cites>FETCH-LOGICAL-c397t-5350acc01282f7015634c2c52daa043a02a5719d1bef56474a68022c028e74d73</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,3748,27924,27925</link.rule.ids></links><search><creatorcontrib>Jeanne, Olivier</creatorcontrib><creatorcontrib>Svensson, Lars E. O</creatorcontrib><title>Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank</title><title>The American economic review</title><description>Central banks target CPI inflation; independent central banks are concerned about their balance sheet and the level of their capital. The first fact makes it difficult for a central bank to implement the optimal escape from a liquidity trap, because it undermines a commitment to overshoot the inflation target. We show that the second fact provides a solution. Capital concerns provide a mechanism for an independent central bank to commit to inflate ex post. The optimal policy can take the form of a currency depreciation combined with a crawling peg, a policy advocated by Svensson as the “Foolproof Way” to escape from a liquidity trap. (JEL E31, E52, E58, E62)</description><subject>Balance sheets</subject><subject>Capital losses</subject><subject>Central banks</subject><subject>Consumer Price Index</subject><subject>Credibility</subject><subject>Deficit financing</subject><subject>Foreign exchange rates</subject><subject>Inflation</subject><subject>Interest rates</subject><subject>Liquidity</subject><subject>Monetary policy</subject><subject>Price levels</subject><subject>Reserve assets</subject><subject>Studies</subject><subject>Taxation</subject><issn>0002-8282</issn><issn>1944-7981</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2007</creationdate><recordtype>article</recordtype><sourceid>8G5</sourceid><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>AZQEC</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><sourceid>GNUQQ</sourceid><sourceid>GUQSH</sourceid><sourceid>M2O</sourceid><recordid>eNotUMtOwzAQtBBIlMKND7A4k-BX4oQbjQpUqlQJytnaOhs1pYlTxz3073FVLvvS7MzOEvLIWcpFpl8AfVrqlKdKqysy4aVSiS4Lfk0mjDGRFKIQt-RuHHfs3HM9IafKY91u9kgr13Vt6LAPNDi6GkLbwZ7ORwsD0sa7jgJdtodjW7fhRNcehle63iL9cnHZNTTEegZ76C3S7y1iOA-hp4u-xgFjiMRVDD6yzqD_vSc3DexHfPjPU_LzPl9Xn8ly9bGo3paJlaUOSSYzBtYyHm9vNONZLpUVNhM1AFMSmIBM87LmG2yyPBqHvGBCWCYK1KrWckqeLryDd4cjjsHs3NH3UdIIKZlguRIR9HwBWe_G0WNjBh_9-5PhzJx_a-JvTakNN1FC_gHUKGtS</recordid><startdate>20070301</startdate><enddate>20070301</enddate><creator>Jeanne, Olivier</creator><creator>Svensson, Lars E. O</creator><general>American Economic Association</general><scope>AAYXX</scope><scope>CITATION</scope><scope>0-V</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7X7</scope><scope>7XB</scope><scope>87Z</scope><scope>88C</scope><scope>88E</scope><scope>88J</scope><scope>8BJ</scope><scope>8FI</scope><scope>8FJ</scope><scope>8FK</scope><scope>8FL</scope><scope>8G5</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ALSLI</scope><scope>AZQEC</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRNLG</scope><scope>FYUFA</scope><scope>F~G</scope><scope>GHDGH</scope><scope>GNUQQ</scope><scope>GUQSH</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>K9.</scope><scope>L.-</scope><scope>M0C</scope><scope>M0S</scope><scope>M0T</scope><scope>M1P</scope><scope>M2O</scope><scope>M2R</scope><scope>MBDVC</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>20070301</creationdate><title>Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank</title><author>Jeanne, Olivier ; Svensson, Lars E. O</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c397t-5350acc01282f7015634c2c52daa043a02a5719d1bef56474a68022c028e74d73</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2007</creationdate><topic>Balance sheets</topic><topic>Capital losses</topic><topic>Central banks</topic><topic>Consumer Price Index</topic><topic>Credibility</topic><topic>Deficit financing</topic><topic>Foreign exchange rates</topic><topic>Inflation</topic><topic>Interest rates</topic><topic>Liquidity</topic><topic>Monetary policy</topic><topic>Price levels</topic><topic>Reserve assets</topic><topic>Studies</topic><topic>Taxation</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Jeanne, Olivier</creatorcontrib><creatorcontrib>Svensson, Lars E. O</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Social Sciences Premium Collection</collection><collection>ProQuest Central (Corporate)</collection><collection>Access via ABI/INFORM (ProQuest)</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>Health & Medical Collection</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Healthcare Administration Database (Alumni)</collection><collection>Medical Database (Alumni Edition)</collection><collection>Social Science Database (Alumni Edition)</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>Hospital Premium Collection</collection><collection>Hospital Premium Collection (Alumni Edition)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>Research Library (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>Social Science Premium Collection</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>International Bibliography of the Social Sciences</collection><collection>Business Premium Collection (Alumni)</collection><collection>Health Research Premium Collection</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>Health Research Premium Collection (Alumni)</collection><collection>ProQuest Central Student</collection><collection>Research Library Prep</collection><collection>International Bibliography of the Social Sciences</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ProQuest Health & Medical Complete (Alumni)</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Global</collection><collection>Health & Medical Collection (Alumni Edition)</collection><collection>Healthcare Administration Database</collection><collection>Medical Database</collection><collection>Research Library</collection><collection>Social Science Database</collection><collection>Research Library (Corporate)</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><jtitle>The American economic review</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Jeanne, Olivier</au><au>Svensson, Lars E. O</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank</atitle><jtitle>The American economic review</jtitle><date>2007-03-01</date><risdate>2007</risdate><volume>97</volume><issue>1</issue><spage>474</spage><epage>490</epage><pages>474-490</pages><issn>0002-8282</issn><eissn>1944-7981</eissn><coden>AENRAA</coden><abstract>Central banks target CPI inflation; independent central banks are concerned about their balance sheet and the level of their capital. The first fact makes it difficult for a central bank to implement the optimal escape from a liquidity trap, because it undermines a commitment to overshoot the inflation target. We show that the second fact provides a solution. Capital concerns provide a mechanism for an independent central bank to commit to inflate ex post. The optimal policy can take the form of a currency depreciation combined with a crawling peg, a policy advocated by Svensson as the “Foolproof Way” to escape from a liquidity trap. (JEL E31, E52, E58, E62)</abstract><cop>Nashville</cop><pub>American Economic Association</pub><doi>10.1257/aer.97.1.474</doi><tpages>17</tpages><oa>free_for_read</oa></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0002-8282 |
| ispartof | The American economic review, 2007-03, Vol.97 (1), p.474-490 |
| issn | 0002-8282 1944-7981 |
| language | eng |
| recordid | cdi_proquest_journals_233020642 |
| source | EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; American Economic Association Web |
| subjects | Balance sheets Capital losses Central banks Consumer Price Index Credibility Deficit financing Foreign exchange rates Inflation Interest rates Liquidity Monetary policy Price levels Reserve assets Studies Taxation |
| title | Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank |
| url | https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2024-12-25T20%3A35%3A14IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Credible%20Commitment%20to%20Optimal%20Escape%20from%20a%20Liquidity%20Trap:%20The%20Role%20of%20the%20Balance%20Sheet%20of%20an%20Independent%20Central%20Bank&rft.jtitle=The%20American%20economic%20review&rft.au=Jeanne,%20Olivier&rft.date=2007-03-01&rft.volume=97&rft.issue=1&rft.spage=474&rft.epage=490&rft.pages=474-490&rft.issn=0002-8282&rft.eissn=1944-7981&rft.coden=AENRAA&rft_id=info:doi/10.1257/aer.97.1.474&rft_dat=%3Cproquest_cross%3E1238511961%3C/proquest_cross%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_pqid=233020642&rft_id=info:pmid/&rfr_iscdi=true |