Keynesian and Monetary Approach to the Liquidity Trap – looking for cointegration evidence from 2008 – Crisis in the United States
|Title:||Keynesian and Monetary Approach to the Liquidity Trap – looking for cointegration evidence from 2008 – Crisis in the United States|
Vol. 5, No 2, 2012
Published date: 20-11-2012 (print) / 20-11-2012 (online)
Journal of International Studies
ISSN: 2071-8330, eISSN: 2306-3483
|Keywords:||liquidity trap, money demand, cointegration|
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.