Jeanne, Olivier. <br/><br/>
Credible Commitment to Optimal Escape from a Liquidity Trap:  The Role of the Balance Sheet of an Independent Central Bank / 
Olivier Jeanne, Lars E.O. Svensson. 
 - Cambridge, Mass.  National Bureau of Economic Research  2004. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w10679 .
 - Working Paper Series (National Bureau of Economic Research)  no. w10679. .
<br/><br/> August 2004. 
<br/><br/> An independent central bank can manage its balance sheet and its capital so as to commit itself to a depreciation of its currency and an exchange-rate peg. This way, the central bank can implement the optimal escape from a liquidity trap, which involves a commitment to higher future inflation. This commitment mechanism works even though, realistically, the central bank cannot commit itself to a particular future money supply. It supports the feasibility of Svensson's Foolproof Way to escape from a liquidity trap. 
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