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Subjects selected the nominal interest rate to stabilize unemployment and inflation at low levels.
This says that the higher is the current price level, the lower the nominal interest rate.
But it is clear that the zero nominal interest rate bound has proven costly.
When inflation rises, for instance, bondholders will expect a higher nominal interest rate on new debt.
The return in money terms (the rate advertised by banks) is called the "nominal" interest rate.
The real interest rate is essentially the nominal interest rate minus the inflation rate.
But the zero nominal interest rate bound prevented them from doing so.
A version of the structural model with the nominal interest rate as the instrument is also available as a note.
Second, we impose the zero lower bound (ZLB) constraint on the nominal interest rate.
… but follow up with this: "But it is clear that the zero nominal interest rate bound has proven costly".
If investors think inflation is on the way, they will simply raise the nominal interest rate they desire.
More suggestions(16)
conventional interest rate
normal interest rate
small interest rate
marginal interest rate
wider interest rate
coupon interest rate
rate interest rate
face interest rate
nominal flow rate
nominal growth rate
nominal exchange rate
nominal policy rate
nominal wage rate
nominal discount rate
nominal sampling rate
nominal detection rate
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com