o:28765 Modeling Macroeconomic Policymakers’ Interactions under Zero Lower Bound Environment The New Keynesian Theoretical Approach en Abstract: The paper examines how the implicit coordination mecha- nisms between the policymakers could help in overcoming negative macroeconomic consequences which are provoked by the problem of zero lower bound (ZLB) on the nominal interest rates. For the long period of time, before the global recession started, the ZLB problem was not found to be interesting for researchers. Immediately after the crisis outbreak, more attention was put on that problem within different approaches since conventional monetary policy faced sub- stantial limitation in overcoming business cycles. Many authors have proposed new unconventional measures in both monetary pol- icy and fiscal policy sphere. The theoretical approaches to the ZLB problem include many different aspects. In the paper we chose to use regime switching models adjusted to simulate occasionally binding constraints in order to investigate different scenarios within the New Keynesian framework. We found that coordination between more passive monetary policymaker and more active fiscal policymaker is crucial in the ZLB environment. Central bank has to follow mon- etary policy rule in which both inflation stabilization and output stabilization have certain positive weight. However, credible policy- making which is supported by the relevant institutions is a necessary precondition for implicit coordination, which substantially decrease the losses occurred as a consequence of ZLB on interest rates Keywords: zero lower bound (ZLB), global recession, macroeco- nomic policymakers’ interactions, New Keynesian model 1552099 10.2478/jcbtp-2019-0001 1552101 1800-9581 2023-04-11T12:03:25.028Z 44 no 46 Aleksandra Praščević Univerzitet u Beogradu Ekonomski fakultet 12946279 0000-0003-1637-515X Milutin Ješić Univerzitet u Beogradu Ekonomski fakultet person 36251495 0000-0002-0715-3064 application/pdf 1866442 https://phaidrabg.bg.ac.rs/o:28765 no yes 16 70 92000001 11A03 Journal of Central Banking Theory and Practice 8 1 5 38 2019