Economics, Econometrics and Finance
4 years ago

New study reveals how precautionary savings drive economic stability at ZLB

RePEc: Research Papers in Economics
Implementing the Zero Lower Bound in an Estimated Regime-Switching DSGE Model
Andrew Binning, Junior Maih

Paper Summary

The article explores how to model and estimate the Zero Lower Bound (ZLB) in a simple economic model with different economic conditions. By analyzing US data, the researchers found that the ZLB is influenced by precautionary savings behavior and expectations in different economic situations. The model accurately reflects the US economy during both stable and ZLB periods.

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