Central banks should raise interest rates during a liquidity trap
the verdict
REFUTED
the evidence says no
confidence 10/100
Central banks should not raise interest rates during a liquidity trap; standard macroeconomic consensus and models indicate that policy rates should remain low to stimulate economic activity.
Evidence against · 2
Fiscal Stimulus in Liquidity Traps: Conventional or Unconventional Policies?
2021 · cited by 0
Paper 3 demonstrates that standard policies like raising rates are ineffective in a liquidity trap, necessitating alternative fiscal measures instead.
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More against · 1
Optimal Monetary Policy in a Liquidity Trap: Evaluations for Japan's Monetary Policy
2024 · cited by 0
Paper 8 illustrates that optimal monetary policy during a liquidity trap involves maintaining zero or low interest rates rather than hiking them.