The effects of foreign shocks when interest rates are at zero

Martin Bodenstein, Christopher Erceg, Luca Guerrieri, Mon, 09/13/2010

CEPR Discussion Paper 8006 analyses how foreign demand shocks impact home economies when monetary policy is constrained by the zero lower bound. The authors find that even in relatively closed economies like the United States and the euro area, ZLB-constrained monetary policy amplifies the effects of foreign shocks.

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URL: http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=8006.asp

Topics: International trade Macroeconomic policy Monetary policy

Tags: DSGE models, spillover effects, zero lower bound