01151nam a22001097a 4500008004100000100004400041245008500085260004800170300003100218520074400249773004800993221207b           ||||| |||| 00| 0 eng d  aNakata, Taisuke and Schmidt, Sebastian   aExpectations-driven liquidity traps: Implications for monetary and fiscal policy  aAmerican Economic Journal: Macroeconomics    a14(4), Oct, 2022: p.68-103  aWe study optimal time-consistent monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence give rise to persistent liquidity trap episodes. Insights from widely studied fundamental-driven liquidity traps are not a useful guide for enhancing welfare in this model. Raising the inflation target, appointing an inflation-conservative central banker, or allowing for the use of government spending as an additional stabilization tool can exacerbate deflationary pressures and demand deficiencies during the liquidity trap episodes. However, appointing a policy-maker who is sufficiently less concerned with government spending stabilization than society eliminates expectations-driven liquidity traps.  aAmerican Economic Journal: Macroeconomics