John Maynard Keynes first raised the question of what can be done to stabilize the economy when it has fallen into a liquidity trap-when interest rates have fallen to a level below which they cannot be driven by further monetary expansion-and whether monetary policy can be effective at all under such circumstances. Long treated as a mere theoretical curiosity, Keynes's question now appears to be one of urgent practical importance, but one with which theorists have become unfamiliar.

What It Means

This is a placeholder explanation generated by the low-overhead model. It interprets "John Maynard Keynes first raised the question of what can be done to stabilize the economy when it has fallen into a liquidity trap-when interest rates have fallen to a level below which they cannot be driven by further monetary expansion-and whether monetary policy can be effective at all under such circumstances. Long treated as a mere theoretical curiosity, Keynes's question now appears to be one of urgent practical importance, but one with which theorists have become unfamiliar." in the context of "Gauti B. Eggertsson and Michael Woodford, "The Zero Bound on Interest Rates and Optimal Monetary Policy" (2003)" to mean that wisdom is timeless.