Research Newsletter Online

2 • 2014

Editorial: Liquidity Trap or Safety Trap?

Many among the academic and central bank communities are willing to describe the current situation in most advanced economies - where the key monetary policy interest rate is at its (zero) lower bound - as  a Keynesian liquidity trap. And indeed, if viewed particularly through the lenses of Keynesian economics, the current situation seems to share many of the features of a Keynesian liquidity trap: central-bank cash injections into private banks have limited effects on interest rates so that (conventional) monetary policy becomes ineffective. In effect, because of free disposal, the zero lower bound prevents nominal interest rates from taking negative values.  
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Unconventional monetary policy measures also affecting emerging economies

The Bank of Finland Institute for Economies in Transition (BOFIT) hosted the Asian Economic Panel meeting on 9–10 June 2014, in cooperation with, among others, the University of California (Davis). The Asian Economic Panel normally includes both more scientific presentations and introductions directly related to different policy issues. The content of the event was also similar this time, and the first day was additionally concluded by a panel discussion on unconventional monetary policy measures and possible effects of their reversal.
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Head of Research
Jouko Vilmunen
Monetary Policy and Research
Research Unit

Bank of Finland
PO Box 160
FI-00101 Helsinki
Phone +385 10 8311 

Head of Research
Iikka Korhonen

ISSN 1796-9131
(web publication)

Research Newsletters (PDF)



​The Research Newsletter, previously published in Finnish only, provides a preview of Bank of Finland research and occasionally also descriptions of policy analyses, as well as information about forthcoming conferences and research publications. The Newsletter also covers the activities of the Bank of Finland's Institute for Economies in Transition (BOFIT). The Newsletter is currently issued two times a year, online.