% WARNING: This file may contain UTF-8 (unicode) characters. % While non-8-bit characters are officially unsupported in BibTeX, you % can use them with the biber backend of biblatex % usepackage[backend=biber]{biblatex} @techreport{NBERw25820, title = "On the Empirical (Ir)Relevance of the Zero Lower Bound Constraint", author = "Debortoli, Davide and GalĂ­, Jordi and Gambetti, Luca", institution = "National Bureau of Economic Research", type = "Working Paper", series = "Working Paper Series", number = "25820", year = "2019", month = "May", doi = {10.3386/w25820}, URL = "http://www.nber.org/papers/w25820", abstract = {The zero lower bound (ZLB) irrelevance hypothesis implies that the economy's performance is not affected by a binding ZLB constraint. We evaluate that hypothesis for the recent ZLB episode experienced by the U.S. economy (2009Q1-2015Q4). We focus on two dimensions of performance that were likely to have experienced the impact of a binding ZLB: (i) the volatility of macro variables and (ii) the economy's response to shocks. Using a variety of empirical methods, we find little evidence against the irrelevance hypothesis, with our estimates suggesting that the responses of output, inflation and the long-term interest rate were hardly affected by the binding ZLB constraint, possibly as a result of the adoption and fine-tuning of unconventional monetary policies. We can reconcile our empirical findings with the predictions of a simple New Keynesian model under the assumption of a shadow interest rate rule.}, }