Measuring the Macroeconomic Impact of Monetary Policy at the Zero Lower Bound
This paper employs an approximation that makes a nonlinear term structure model extremely tractable for analysis of an economy operating near the zero lower bound for interest rates. We show that such a model offers an excellent description of the data and can be used to summarize the macroeconomic effects of unconventional monetary policy at the zero lower bound. Our estimates imply that the efforts by the Federal Reserve to stimulate the economy since July 2009 succeeded in making the unemployment rate in December 2013 0.13% lower than it otherwise would have been.
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This paper was revised on July 24, 2014
Document Object Identifier (DOI): 10.3386/w20117
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