100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Sample Essay - Economics of Money & Banking (ECON0038) £13.36   Add to cart
Quickly navigate to
Preview
  2.  
  3. University College London (UCL)
  4.  
  5. Economics of Money & Banking (ECON0038)

Essay

Sample Essay - Economics of Money & Banking (ECON0038)

 14 views  0 purchase

This is an example of a past essay assessment that scored a first-class grade in ECON0038 - Economics of Money & Banking Essay answers the following prompt: Analyse the challenges and effectiveness of monetary policy in economies that are near or at the Zero Lower Bound (ZLB). Highlight the pot...

[Show more]

Preview 2 out of 9  pages

Document information

  • July 14, 2024
  • 9
  • 2023/2024
  • Essay
  • Unknown
  • A+

Subjects

Written for

All documents for this subject (2)

Seller

avatar-seller
jasminek1

Content preview

TOPIC 3 ESSAY QUESTION
Candidate Number: FSQL9
Word Count: 1,094




University College London
ECON0038: The Economics of Money & Banking

, Introduction:

The Zero Lower Bound (ZLB) refers to the point at which nominal interest rates in the
economy are at or near zero (Kumhof and Wang, 2020). At this point, the spread between the
central bank policy rate and deposit rate are so low that financial institutions prefer saving
their excess reserves at the central bank rather than lending it in financial markets, leading to
constrained credit supplies, commonly referred to as a “liquidity trap” (Kumhof and Wang,
2020).

In modern economic history, the ZLB became a policy challenge during the Great Depression
of the 1930s (Kumhof and Wang, 2020). Later, it reemerged as a challenge in Japan’s
prolonged economic stagnation, sometimes referred to as the “Lost Decade”. Due to this, in
this essay I will be considering the challenges faced by central banks at the ZLB and
assessing the effectiveness of traditional and unconventional monetary policy to spur
economic growth at the ZLB for Japan.

Background:

Japan’s battle with the ZLB constraint begun following the bursting of the 1991 real estate
and stock bubble (Kowalewski and Shirai, 2023). This delivered a large negative shock to the
Japanese economy, leading to negative accelerator effects and economic stagnation (Ueda,
2012); between 1991-1993, GDP growth fell from approximately 3.5% to -0.5% (Figure 1).
The Bank of Japan (BoJ) lowered the discount rate from 6% to 0.5% between 1991-1996
(Figure 2) in response to persistently low inflation and stagnant economic growth.




1

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller jasminek1. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £13.36. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

62890 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£13.36
  • (0)
  Add to cart