Amplification of shocks at the zero lower bound in a small open and large closed economy |
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| Authors: | Michał Brzoza-Brzezina |
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| Affiliation: | 1. Narodowy Bank Polski, Warsaw, Poland;2. Department of Quantitative Economics, Warsaw School of Economics, Warsaw, Poland |
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| Abstract: | This letter compares the consequences of hitting the zero lower bound in small open and large closed economies. I show that in a large economy shocks are modified by the zero lower bound on interest rate much more than in a small one – as a result, the large economy may suffer more. |
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| Keywords: | Zero lower bound small open economy amplification of shocks |
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