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Post by Guest on May 13, 2016 14:04:23 GMT
We discussed how in a liquidity trap, if the central bank can use monetary policy to raise expectations then it becomes effective again as the real interest rate can fall when IS shifts right. How does the CB actually increase inflation expectations? Thanks!
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Post by Oliver on May 13, 2016 21:18:24 GMT
Hi,
In the dynamic AD-AS model, we discussed the link between monetary policy and inflation.
Best Oliver
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