Events
Seminar
Overcoming zero lower bound on interest rate without inflation or inflationary expectations
Speaker
Gurbachan Singh, Visiting faculty, Indian Statistical Institute (ISI), DelhiEvent date
शुक्र, 13 दिसमबरVenue
NIPFP AuditoriumAbstract
There is a widespread view that inflation or inflationary expectations are the only way to overcome the zero lower bound on interest rate. This paper shows that this is not true. It is shown that a tax-subsidy scheme can be used to overcome the zero lower bound on interest rate - without any inflation or inflationary expectations. A simple `old' Keynesian model is used though the treatment is novel and in-depth. The paper ends with a discussion that suggests that the `non-inflation solution' is superior to the `inflation solution' under some conditions.