A situation in which expansionary monetary policy fails to stimulate the economy. As used by Keynes (1936), this meant interest rates so low that expectations of their increase made people unwilling to holdbonds. Today it usually means a nominal interest rate so near zero that lowering it further is impossible or ineffective.
Related information about liquidity trap:
- Liquidity trap - Wikipedia, the free encyclopedia
A liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest ...
- The Liquidity Trap - Federal Reserve Bank of New York
A liquidity trap is defined as a situation in which the short-term nominal interest ... supply has no effect in a liquidity trap so that monetary policy is ineffective. The ...
- Liquidity Trap Definition | Investopedia
A situation in which prevailing interest rates are low and savings rates are high, making monetary policy ineffective. In a liquidity trap, consumers choose to avoid ...
- The Sorrow and the Pity of Another Liquidity Trap: Brad DeLong ...
Jul 5, 2011 ... There is only one real law of economics: the law of supply and demand. If the quantity supplied goes up, the price goes down.
- How Much Of The World Is In a Liquidity Trap? - NYTimes.com
Mar 17, 2010 ... While you can think of things the Fed can do even at the zero lower bound, that lower bound is in practice a major constraint on policy.
- Are We Almost Out of the Liquidity Trap? (Wonkish) - NYTimes.com
Jan 11, 2012 ... Aha. Greg Mankiw tells us that when you apply the coefficients for his suggested simple Taylor rule (a rule for setting the Fed funds rate), ...
- Bernanke risks creating a liquidity trap - FT.com
Sep 10, 2012 ... The Federal Reserve should stop trying to engineer lower long-term interest rates . Further efforts to manipulate the yield curve by driving ...
- Why QE3 Can't Work: Understanding The Liquidity Trap - Seeking ...
Sep 16, 2012 ... The Fed's move on Thursday to a massive and open ended injection of money into the U.S. economy certainly had an impact in the short term ...