1. Bassetto (2004) suggests that a commitment to ignore the zero lower bound is sucient to rule out the existence of self-fullling equilibria. Through the channel system, the central bank could push the target rate below zero. Whether the creation of such an arbitrage opportunity is plausible, however, is unclear. For example, as implied by Niehan's microtheoretic framework above, the marginal rate of substitution between commodities and transactions balances is equal to the ratio of storage costs and the rate of return on money. Negative nominal rates would reduce the relative costs of storage and encourage substitution into commodities;fact
2. Monetary policy and price level determinacy in a cash-in-advance economy