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Understanding the Liquidity Trap by Chinesh Yadav is a document available to read on EtoBox.
Monetary policy is ineffective at stimulating the economy during a liquidity trap. Originally conceived by Keynes, a liquidity trap occurs when further injections of money do not lower interest rates due to expectations of adverse events like deflation. Later economists argued monetary policy could still work by directly increasing money supply and aggregate demand, not just through interest rates. However, when Japan faced low growth in the 1990s despite near-zero rates, the concept of liquidity trap regai
- Author
- Chinesh Yadav
- Language
- EN