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dc.contributor.authorPalacio-Vera, Alfonsoen_US
dc.date.accessioned2011-09-14en_US
dc.date.accessioned2012-04-12T14:22:23Z-
dc.date.available2012-04-12T14:22:23Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/57066-
dc.description.abstractThe main purpose of this study is to explore the potential expansionary effect stemming from the monetization of debt. We develop a simple macroeconomic model with Keynesian features and four sectors: creditor households, debtor households, businesses, and the public sector. We show that such expansionary effect stems mainly from a reduction in the financial cost of servicing the public debt. The efficacy of the channel that allegedly operates through the compression of the risk/term premium on securities is found to be ambiguous. Finally, we show that a country that issues its own currency can avoid becoming stuck in a structural liquidity trap, provided its central bank is willing to monetize the debt created by a strong enough fiscal expansion.en_US
dc.language.isoengen_US
dc.publisherLevy Economics Inst. Annandale-on-Hudson, NYen_US
dc.relation.ispartofseriesWorking paper, Levy Economics Institute 685en_US
dc.subject.jelE10en_US
dc.subject.jelE12en_US
dc.subject.jelE44en_US
dc.subject.jelE52en_US
dc.subject.jelE58en_US
dc.subject.ddc330en_US
dc.subject.keywordfloor systemen_US
dc.subject.keyworddebt monetizationen_US
dc.subject.keywordfunctional financeen_US
dc.subject.keywordpolicy coordinationen_US
dc.subject.keywordneutral interest rateen_US
dc.titleQuantitative easing, functional finance, and the "neutral" interest rateen_US
dc.typeWorking Paperen_US
dc.identifier.ppn668287837en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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