Have We Underestimated the Likelihood and Severity of Zero Lower Bound Events

@article{Chung2011HaveWU,
  title={Have We Underestimated the Likelihood and Severity of Zero Lower Bound Events},
  author={H. Chung and J. Laforte and D. Reifschneider and J. Williams},
  journal={Journal of Money, Credit and Banking},
  year={2011},
  volume={44},
  pages={47-82}
}
Before the recent recession, the consensus among researchers was that the zero lower bound (ZLB) probably would not pose a significant problem for monetary policy as long as a central bank aimed for an inflation rate of about 2 percent; some have even argued that an appreciably lower target inflation rate would pose no problems. This paper reexamines this consensus in the wake of the financial crisis, which has seen policy rates at their effective lower bound for more than two years in the… Expand
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