Economics, Econometrics and Finance
4 years ago

Price-level targeting offers escape from liquidity trap, avoiding economic downfall.

1 view
Economic Affairs
THE LIQUIDITY TRAP AND PRICE‐LEVEL TARGETING
Andrew Lilico

Paper Summary

The article talks about how Keynesian fiscal expansion doesn't work in a liquidity trap. Inflation-targeting can make things worse, but price-level targeting can avoid the trap completely.

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