Replication data for: Liquidity Trap and Excessive Leverage
Principal Investigator(s): View help for Principal Investigator(s) Anton Korinek; Alp Simsek
Version: View help for Version V1
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Project Citation:
Korinek, Anton, and Simsek, Alp. Replication data for: Liquidity Trap and Excessive Leverage. Nashville, TN: American Economic Association [publisher], 2016. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116154V1
Project Description
Summary:
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We investigate the role of macroprudential policies in mitigating
liquidity traps. When constrained households engage in deleveraging,
the interest rate needs to fall to induce unconstrained households to
pick up the decline in aggregate demand. If the fall in the interest rate
is limited by the zero lower bound, aggregate demand is insufficient
and the economy enters a liquidity trap. In this environment,
households' ex ante leverage and insurance decisions are associated
with aggregate demand externalities. Welfare can be improved with
macroprudential policies targeted toward reducing leverage. Interest
rate policy is inferior to macroprudential policies in dealing with
excessive leverage. (JEL D14, E23, E32, E43, E52, E61, E62)
Scope of Project
JEL Classification:
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D14 Household Saving; Personal Finance
E23 Macroeconomics: Production
E32 Business Fluctuations; Cycles
E43 Interest Rates: Determination, Term Structure, and Effects
E52 Monetary Policy
E61 Policy Objectives; Policy Designs and Consistency; Policy Coordination
E62 Fiscal Policy
D14 Household Saving; Personal Finance
E23 Macroeconomics: Production
E32 Business Fluctuations; Cycles
E43 Interest Rates: Determination, Term Structure, and Effects
E52 Monetary Policy
E61 Policy Objectives; Policy Designs and Consistency; Policy Coordination
E62 Fiscal Policy
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