Optimal Monetary Policy in a Liquidity Trap

We consider the consequences for monetary policy of the zero floor for nominal interest rates. The zero bound can be a significant constraint on the ability of a central bank to combat deflation. We show, in the context of an intertemporal equilibrium model, that open-market operations, even of unconventional' types, are ineffective if they do not change expectations about the future conduct of policy; in this sense, a liquidity trap' is possible. Nonetheless, a credible commitment to the right sort of history-dependent policy can largely mitigate the distortions created by the zero bound. In our model, optimal policy involves a commitment to adjust interest rates so as to achieve a time-varying price-level target, when this is consistent with the zero bound. We also discuss ways in which other central-bank actions, while irrelevant apart from their effects on expectations, may help to make credible a central bank's commitment to its target, and consider implications for the policy options currently available for overcoming deflation in Japan.

The Zero Bound on Interest Rates and Optimal Monetary Policy

This paper considers the consequences for monetary policy of the zero floor for nominal interest rates. The zero bound can be a significant constraint on the ability of a central bank to combat deflation. The paper shows, in the context of an intertemporal equilibrium model, that open-market operations, even of "unconventional" types, are ineffective if future policy is expected to be purely forward looking. However, a credible commitment to the right sort of history-dependent policy can largely mitigate the distortions created by the zero bound. In the model, optimal policy involves a commitment to adjust interest rates so as to achieve a time-varying price-level target, when this is consistent with the zero bound. The paper also discusses ways in which other central bank actions, although irrelevant apart from their effects on expectations, may help to make a central bank's commitment to its target more credible.macroeconomics, Zero Bound, Interest Rates, Optimal Monetary Policy

Correspondence - January 26, 1966 - Woodford B. Hackley, Virginia Baptist Historical Society

A correspondence from Woodford B. Hackley to Roland Leath about Madison Edwards Parrish.https://digitalcommons.gardner-webb.edu/first-baptist-shelby-madison-edward-parrish/1000/thumbnail.jp

Communication satellite technology: State of the art and development opportunities

Opportunities in communication satellite technology are identified and defined. Factors that tend to limit the ready availability of satellite communication to an increasingly wide group of users are evaluated. Current primary limitations on this wide utilization are the availability of frequency and/or synchronous equatorial satellite positions and the cost of individual user Earth terminals. The former could be ameliorated through the reuse of frequencies, the use of higher frequency bands, and the reduction of antenna side lobes. The latter limitation requires innovative hardware, design, careful system design, and large scale production

New Zealand's agri-food opportunities in China

China has become New Zealand’s most important destination for food and fibre exports. In the year ending 30 June 2012, total exports from New Zealand to China were worth $6.1 billion, of which food and fibre exports were worth$4.9 billion. This was a three-fold increase in only five years. A main feature of these exports is that they have been mainly commodity-based. Although it is possible to find New Zealand branded food products in some supermarkets, the overall effect at the consumer level remains low. Despite its obvious importance, China remains a country which is poorly understood in New Zealand. This is particularly the case in relation to agri-food opportunities. In this article we set out what we consider to be the major forces which will shape the future opportunities

Sheep meat in China and the opportunities for New Zealand

In 2012, China replaced the United Kingdom as the most important destination by volume for New Zealand sheep meat. In this article we explain the reasons behind the increased demand, and look at what the future might bring. Main issues relate to degradation of the Chinese grasslands, the high opportunity cost of raising sheep on arable land, increased consumer demand for sheep meat, and the challenge of moving from commodity sales to consumer-ready products

New Zealand's horticultural opportunities in China

New Zealand’s horticultural products do have a presence in China, such as kiwifruit and apples, but there are more opportunities for New Zealand within China’s horticulture sector. However this will not be in the commodity sector where the local cost of production is much lower than in New Zealand. The Chinese horticulture advantage comes from relatively low labour costs combined with modern technologies. This creates a different situation from dairy and meat where New Zealand’s competitive advantage does extend into commodity products and markets. In contrast, a competitive advantage for New Zealand’s horticultural products in China requires a branding focus aimed at top-end markets, with an associated clean green story which translates as meaning safe food. Phytosanitary challenges for some crops still need to be sorted out at a government level. As well as fresh produce, the opportunities can include fruit juices and dried fruit. There may also be opportunities, under strict licensing and quality control, of patented and trade-marked New Zealand-bred varieties

Policy Options in a Liquidity Trap

Taken from page 76 -- "The specter of a “liquidity trap,” originally proposed as a theoretical possibility by John Maynard Keynes (1936) but long considered to be of doubtful practical relevance, has recently created alarm among the world’s central banks. In Japan, the overnight rate has been essentially at zero for most of the time since February 1999, making further interest-rate cuts impossible. Yet until well into 2003, growth remained anemic while prices continued to fall, suggesting a need for further monetary stimulus. Since March 2001, the Bank of Japan has supplemented its “zero-interest-rate policy” with a policy of “quantitative easing,” under which additional bank reserves are supplied beyond those needed to keep overnight interest rates at zero. Yet an increase in base money of more than 50 percent failed to halt the deflation, suggesting a liquidity trap. More recently, other central banks, including the Fed, have come close enough to the zero bound to worry about how they would deal with a similar predicament. Here we first discuss whether monetary policy should actually become ineffective when the zero bound on interest rates is reached. We argue that open-market operations, even of “unconventional” types, will be ineffective if they do not change expectations about the future conduct of policy; in this sense, a liquidity trap is possible. Nonetheless, a credible commitment regarding future policy can largely mitigate the distortions created by the zero bound. We fully characterize the optimal commitment in a simple example.

Doing agribusiness in China

There is a widespread belief that partner arrangements between New Zealand and Chinese businesses have a high risk of failure as a result of different ways of doing business. This article presents perspectives on these cross-cultural problems, developed from interviews with nine informants from the food and agribusiness sector, including four New Zealand entrepreneurs who currently work and live in China. Also interviewed were five Chinese who are either entrepreneurs themselves, or middle to senior management working closely with New Zealanders. The information presented here is the first stage of a research project investigating cross-cultural business relationships between New Zealanders and Chinese in New Zealand agribusinesses operating in China