Keynesian and Monetary Approach to the Liquidity Trap – looking for cointegration evidence from 2008 – Crisis in the United States

Information
Title: Keynesian and Monetary Approach to the Liquidity Trap – looking for cointegration evidence from 2008 – Crisis in the United States
Issue: Vol. 5, No 2, 2012
Published date: 20-11-2012 (print) / 20-11-2012 (online)
Journal: Journal of International Studies
ISSN: 2071-8330, eISSN: 2306-3483
Authors: Marcin Brycz
Keywords: liquidity trap, money demand, cointegration
DOI: 10.14254/2071-8330.2012/5-2/3
DOAJ: https://doaj.org/article/cafbb63f7ea04afd814e80ff4aab9506
Language: English
Pages: 18-29 (12)
Website: https://www.jois.eu/?110,en_keynesian-and-monetary-approach-to-the-liquidity-trap-%E2%80%93-looking-for-cointegration-evidence-from-2008-%E2%80%93-crisis-in-the-united-states
File https://www.jois.eu/files/BryczV5N2.pdf
Abstract

The paper reflects on the phenomenon of the liquidity trap in the U.S. during 2008- financial crisis. The modern history of economics indentyfied strictly only one such a case: Japan since mid – 1990’s. The main focus is to collect evidence on the liquidity trap using both: monetary approach and Neo-keynesian. Standard Johansen cointegration anlaysis is used to catch the structural macroeconomic change since the Lehman Bros. collapse. Findings provide the evidence for: a) money demand function change due to zero-bond policy; b) the role of expectations in the liquidity trap condition; c) excessive raise of ‘lemon’ cost on the financial intermediation market.