NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Measuring the Macroeconomic Impact of Monetary Policy at the Zero Lower Bound

Jing Cynthia Wu, Fan Dora Xia

NBER Working Paper No. 20117
Issued in May 2014, Revised in May 2015
NBER Program(s):Asset Pricing, Economic Fluctuations and Growth, Monetary Economics

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 compared to the benchmark model and can be used to summarize the macroeconomic effects of unconventional monetary policy. 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 1% lower, which is 0.13% more compared to the historical behavior of the Fed.

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Document Object Identifier (DOI): 10.3386/w20117

Published: Jing Cynthia Wu & Fan Dora Xia, 2016. "Measuring the Macroeconomic Impact of Monetary Policy at the Zero Lower Bound," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(2-3), pages 253-291, 03. citation courtesy of

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