Zero Nominal Interest Rates, Unemployment, Excess Reserves and Deflation in a Liquidity Trap

Murota, Ryu-ichiro; Ono, Yoshiyasu

doi:10.1111/j.1467-999x.2011.04142.x

Cited by 18 publications

(18 citation statements)

References 30 publications

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“…Ono (2010) applies the model to analyse Japan's long-run stagnation and economic policies. Murota and Ono (2011) show that if households consider money as a target of status, aggregate demand deficiency appears. Hashimoto and Ono (2011) apply this type of stagnation model to examine the effects of child allowances on the population growth and aggregate demand.…”

Section: Introductionmentioning

confidence: 99%

Macroeconomic Interdependence Between a Stagnant and a Fully Employed Country

Ono

2017

Jpn Econ Rev

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This paper presents a two‐country two‐commodity dynamic model where one country achieves full employment and the other suffers from secular stagnation of aggregate demand. Own and spillover effects of changes in preference, productivity and policy parameters are examined. Parameter changes that improve the stagnant country's current account, such as a reduction in government purchases, a decrease in foreign aid and an improvement in productivity, raise the relative price of the home commodity. Consequently, home employment shrinks, deflation worsens and consumption decreases. The terms of trade for the full‐employment country deteriorate. Thus, income and consumption decrease in both countries.

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Section: Introductionmentioning

confidence: 99%

Macroeconomic Interdependence Between a Stagnant and a Fully Employed Country

Ono

2017

Jpn Econ Rev

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“…Note that (13) gives a unique value of y satisfying 0 < y < y because (8) implies c(y) + g < y and (12) …”

Section: The Consumption Function and The Multiplier Effectmentioning

confidence: 99%

A Reinterpretation of the Keynesian Consumption Function and Multiplier Effect

Murota

Ono

2010

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe propose a microeconomic foundation of the multiplier effect and that of the consumption function using a dynamic optimization model that explains a shortage of aggregate demand and unemployment. We show that government purchases boost aggregate demand through a multiplier-like process but that the implication is quite different. It works through not an increase in disposable income but moderation of deflation, which makes money holding costly and stimulates consumption.

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“…4) and Murota , fig. 1) for demand deficiency and Murota and Ono , figs. 1 and 2) for unemployment and deflation.…”

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Aggregate demand deficiency, labor unions, and long‐run stagnation

Murota

2018

Metroeconomica

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Using a money‐in‐the‐utility‐function model, this paper considers long‐run stagnation where insatiable demand for money persistently creates aggregate demand deficiency and consequent unemployment in the presence of nominal wage stickiness attributed to union wage setting. In this long‐run stagnation, generous unemployment benefits reduce unemployment. Moreover, paradoxically, unemployment declines if labor unions give weight to nominal wage gains rather than employment increases.

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Zero Nominal Interest Rates, Unemployment, Excess Reserves and Deflation in a Liquidity Trap

Cited by 18 publications

References 30 publications

Macroeconomic Interdependence Between a Stagnant and a Fully Employed Country

Macroeconomic Interdependence Between a Stagnant and a Fully Employed Country

A Reinterpretation of the Keynesian Consumption Function and Multiplier Effect

Aggregate demand deficiency, labor unions, and long‐run stagnation

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