Data and Code for: Understanding Persistent ZLB: Theory and Assessment

Principal Investigator(s):  View help for Principal Investigator(s) Pablo Cuba-Borda, Board of Governors of the Federal Reserve System; Sanjay R. Singh, Federal Reserve Bank of San Francisco, and University of California Davis

Version:  View help for Version V1

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Project Description

Summary:  View help for Summary
We develop a theoretical framework that rationalizes two hypotheses of long-lasting low-interest rate episodes: deflationary-expectations-traps and secular stagnation in a unified setting. These hypotheses differ in the sign of the theoretical correlation between inflation and output growth that they imply. Using the data from Japan over 1998:Q1-2019:Q4, we find that the data favor the expectations-trap hypothesis. The superior model fit of the expectations trap relies on its ability to generate the observed negative correlation between inflation and output growth.

Scope of Project

Subject Terms:  View help for Subject Terms Expectations-driven trap; secular stagnation; zero lower bound.
JEL Classification:  View help for JEL Classification
      E31 Price Level; Inflation; Deflation
      E32 Business Fluctuations; Cycles
      E52 Monetary Policy
Geographic Coverage:  View help for Geographic Coverage Japan


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Published Versions

V1 [2024-06-12]

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