Template-Type: ReDIF-Paper 1.0 
Title: Why may large economies suffer more at the zero lower bound?
Author-Name: Michał Brzoza-Brzezina 
Abstract: This paper compares the consequences of hitting the zero lower bound in small open and large closed economies. I costruct a two-economy New Kenynesian model and calibrate it so that one economy is small and open and the second large and closed. Then I conduct a number of experiments assuming that the zero lower bound binds for one or the other economy. At the ZLB bad shocks are amplified and good shocks dampened. I show that these modifications are much stronger in the large than in the smalleconomy. As a result the large economy may suffer more at the ZLB.
Number: 2016-012
Length: 19 pages 
Creation-Date: 2016-06
Keywords: zero lower bound, small open economy, amplification of shocks
Classification-JEL: E43, E52
File-URL: https://hdl.handle.net/20.500.12182/1096
File-Format: Application/pdf
DOI: 10.33119/kaewps2016012
Handle: RePEc:sgh:kaewps:2016012