This concept implies a "reverse credibility problem":  no one will believe a commitment to be irresponsible in the future, by exceeding the inflation target.
Fernandez-Villaverde and Rubio-Ramirez argue that "structural reform" can be effective despite this concept because if forward-looking consumers expect their wealth to grow, they will consume more in the present. This concept implies a "reverse credibility problem":  no one will believe a commitment to be irresponsible in the future, by exceeding the inflation target. This concept is one indication of demand-driven secular stagnation according to Larry Summers, and Abe-nomics is supposed to be solution to this concept., which has plagued the (*) Japanese macroeconomy for decades. Fiscal policy is very effective and monetary policy totally ineffective under this concept, according to Krugman's 1998 paper. This concept can be interpreted as the effect of an excess supply of capital or demand for safe assets, and it exists because it's always possible to store wealth as cash. For 10 points, name this concept that refers to the minimum level of the nominal interest rate, which cannot be negative.
Fernandez-Villaverde and Rubio-Ramirez argue that "structural reform" can be effective despite this concept because if forward-looking consumers expect their wealth to grow, they will consume more in the present.
Zero Lower Bound (or ZLB. Accept "Zero Bound" since some papers use that phrase, but not "ZB," which no one does.)