Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Liquidity Trap and Persistent Unemployment with Dynamic Optimizing Agents: Empirical Evidence

The Liquidity Trap and Persistent Unemployment with Dynamic Optimizing Agents: Empirical Evidence Abstract Standard money-in-utility dynamic models assume satiable liquidity preference, and thereby prove the existence of a full-employment steady state. In the same framework, it is known that under insatiable liquidity or wealth preference there is a case where a full-employment steady state does not exist. A liquidity trap then arises and unemployment persists in the steady state. Using both parametric and non-parametric methods, this paper empirically finds that insatiable liquidity/wealth preference is better supported. Thus, without assuming any permanent distortion, we can analyse an effective demand shortage in a dynamic optimization framework. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Japanese Economic Review Springer Journals

The Liquidity Trap and Persistent Unemployment with Dynamic Optimizing Agents: Empirical Evidence

Loading next page...
 
/lp/springer-journals/the-liquidity-trap-and-persistent-unemployment-with-dynamic-optimizing-h2qFcj97je

References (12)

Publisher
Springer Journals
Copyright
2004 Japanese Economic Association
ISSN
1352-4739
eISSN
1468-5876
DOI
10.1111/j.1468-5876.2004.00315.x
Publisher site
See Article on Publisher Site

Abstract

Abstract Standard money-in-utility dynamic models assume satiable liquidity preference, and thereby prove the existence of a full-employment steady state. In the same framework, it is known that under insatiable liquidity or wealth preference there is a case where a full-employment steady state does not exist. A liquidity trap then arises and unemployment persists in the steady state. Using both parametric and non-parametric methods, this paper empirically finds that insatiable liquidity/wealth preference is better supported. Thus, without assuming any permanent distortion, we can analyse an effective demand shortage in a dynamic optimization framework.

Journal

The Japanese Economic ReviewSpringer Journals

Published: Dec 1, 2004

Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history

There are no references for this article.