What are the limitations of using interest rates as the primary tool of contractionary monetary policy in certain economic environments?

Jun 29, 2023 ... Notes: The chart shows the evolution of stance after two narratively identified contractionary monetary policy shock at time t intended to ... Contractionary monetary shocks raise unemployment more strongly than expansionary shocks lower it. Page 1 policies during the Great Recession after reduc- ing ... Jan 16, 2015 ... Working Paper No. 521. By Benjamin Nelson, Gabor Pinter and Konstantinos Theodoridis ... To explain this 'waterbed' effect, we propose a standard ... A contractionary MP shock decreases output and inflation rates even under the ELB. •. However, the effects of identified MP shocks on macroeconomic variables ... Jul 24, 2023 ... As a result, contractionary monetary policy increases the quality of deals taking place as fewer financially constrained firms engage in M&A. Aug 26, 2024 ... Contractionary monetary policy is a macroeconomic tool that a central bank uses to reduce inflation. The goal is to slow the pace of the economy ... Contractionary monetary policy systematically increases inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary ... Frequently asked questions. What is monetary policy? contractionary monetary policy exerts an important reallocation effect by cleansing unproductive firms and enhancing aggregate productivity. At the same ... contractionary monetary policy, monetary policy designed to decrease aggregate demand, decrease output, and decrease inflation. Increases unemployment.