We provide a new, simple mechanism for why a monetary policy fails and, consequently, produce a long stagnation accompanied by low interest rates. The base models we use to explain this mechanism are an IS-LM model and the IS-MP model constructed by Romer (2000, 2013). We construct dynamic versions of the base models, which possess adaptive adjustments for expected income. We incorporate two types of pessimism into the dynamic models: the pessimism in the initial condition and the (intended or unintended) pessimistic mode embedded in the models. We consider the situation where a monetary policy is implemented for the country to recover from a low economic situation. Then, we focus on the transition processes from the old equilibrium, existing before implementing the monetary policy, to the new equilibrium after implementing it. In considering these, we assume that the equilibria in the models are globally asymptotically stable. As a result of the combined effect of two types of pessimism, the economy may fall into a long stagnation accompanied by quite low interest rate. Moreover, since such pessimisms produce the long stagnation, our result exhibits a self-fulfilling prophesy. Therefore, if such pessimisms are not removed, the long stagnation may worsen and the quite low interest rates may persist for a long time. A remarkable feature of our result is that, even if demand-side fundamentals such as investment and consumption functions are not changed, the long stagnation we consider emerges merely from pessimism. In this sense, our result gives a new perspective concerning the source of a long stagnation
