Monetary policy alternatives at the zero bound: an empirical assessment.

THE CONVENTIONAL INSTRUMENT of monetary policy in greatest in quantity major industrial economies is the actual short term nominal interest rate, of that kind as the overnight federal capitals rate in the case of the United States. The use of this instrument, however, implies a potential problem: Because publicity (which pays a nominal interest rate of zero) can be used as a store of value, the short-term nominal interest rate cannot be pushed below cipher Should the nominal rate hit nothing the real short-term interest rate--at that point equal to the negative of prevailing inflation expectations--may be higher