Table 1 Open in new tab Testable...

	Δ Long-term inflation expectations
$Δ p_{β}^{ZLB, 6}$	−1.32^***	−0.68^***	−0.01^***	−0.01^***	−0.04^***	−0.05^*
	(0.06)	(0.09)	(0.00)	(0.00)	(0.01)	(0.03)
${(Δ p_{β}^{ZLB, 6})}^{2}$		−19.17^***		0.12		0.17
		(2.57)		(0.16)		(0.35)
Obs	50	50	50	50	50	50

	Δ Long-term inflation expectations
$Δ p_{β}^{ZLB, 6}$	−1.32^***	−0.68^***	−0.01^***	−0.01^***	−0.04^***	−0.05^*
	(0.06)	(0.09)	(0.00)	(0.00)	(0.01)	(0.03)
${(Δ p_{β}^{ZLB, 6})}^{2}$		−19.17^***		0.12		0.17
		(2.57)		(0.16)		(0.35)
Obs	50	50	50	50	50	50

Table 1

Testable predictions using simulated data under alternative monetary policies at the zero lower bound

	Δ Long-term inflation expectations
	Conventional policy		Forward guidance		Asset purchases
$Δ p_{β}^{ZLB, 6}$	−1.32^***	−0.68^***	−0.01^***	−0.01^***	−0.04^***	−0.05^*
	(0.06)	(0.09)	(0.00)	(0.00)	(0.01)	(0.03)
${(Δ p_{β}^{ZLB, 6})}^{2}$		−19.17^***		0.12		0.17
		(2.57)		(0.16)		(0.35)
Obs	50	50	50	50	50	50

	Δ Long-term inflation expectations
	Conventional policy		Forward guidance		Asset purchases
$Δ p_{β}^{ZLB, 6}$	−1.32^***	−0.68^***	−0.01^***	−0.01^***	−0.04^***	−0.05^*
	(0.06)	(0.09)	(0.00)	(0.00)	(0.01)	(0.03)
${(Δ p_{β}^{ZLB, 6})}^{2}$		−19.17^***		0.12		0.17
		(2.57)		(0.16)		(0.35)
Obs	50	50	50	50	50	50

Each regression denotes the model-implied relationship between longer-run inflation expectations and the probability of a binding zero lower bound constraint under three alternative monetary policy at the zero lower bound: (1) Policymakers only rely on their conventional policy tool, (2) they choose to stabilize the economy with forward guidance about future policy, or (3) they engage in asset purchases at the zero lower bound. See Section 1.6 for additional details.

Note: OLS standard errors are shown in parenthesis. *, **, or *** implies that the P-value is less than 0.10, 0.05, or 0.01, respectively.

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