We provide a theory of the limits to monetary policy independence ... our theory is the existence of an “Expansionary Lower Bound” (ELB), defined as an interest rate threshold below which monetary ...

First, as expansionary monetary policy can boost the economy as a whole, investments more sensitive to the business cycle will usually benefit and vice versa with contractionary policy.

optimal monetary policy is in fact contractionary. Conversely, if sufficient containment measures are introduced, central bank interventions should be expansionary and help stabilize economic activity ...