Microfoundations of Liquidity Trap

Student: Nadymchuk Vladislav

Supervisor: Dmitry V. Levando

Educational Programme: Joint HSE-NES Undergraduate Program in Economics (Bachelor)

Year of Graduation: 2017

The liquidity trap can be defined as situation when interest rates in economy are closed to zero and monetary policy is ineffective. This paper provides a strategic market game in a simple open economy model, based on Quint and Shubik (2004) model. Result of the paper is a possible microeconomy mechanism of liquidity trap in an open economy.

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