Suppose a liquidity trap . We know that conventional monetary policy does not matter in a liquidity

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Suppose a liquidity trap . We know that conventional monetary policy does not matter in a liquidity trap. However, show that, in the coordination failure model, monetary policy could act as a signal that coordinates private actions on a good equliibrium. Use a diagram, and discuss your results.

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Macroeconomics

ISBN: 978-0134472119

6th Edition

Authors: Stephen D. Williamson

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