The breakdown of the money multiplier at the zero lower bound

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Abstract

Unconventional monetary policy intends to influence the economy at the zero lower bound. However, this policy becomes less effective due to a diminishing money multiplier in a liquidity trap. We show that this creates an extreme low interest rate, low multiplier regime. This insight contributes to the literature, which shows there is uncertainty over the effects of unconventional monetary policy and the precise channel through which it works. © 2014 Taylor & Francis.

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APA

van den End, J. W. (2014). The breakdown of the money multiplier at the zero lower bound. Applied Economics Letters, 21(13), 875–877. https://doi.org/10.1080/13504851.2014.894626

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