Economics, Econometrics and Finance
4 years ago

Quantitative Easing Solves Economic Paradoxes, Boosts Output and Cuts Taxes

SSRN Electronic Journal
Revisiting the New Keynesian Policy Paradoxes under QE
Dario Bonciani, Joonseok Oh

Paper Summary

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Standard New Keynesian models have some confusing results when interest rates are low. But by using Quantitative Easing, the central bank can fix these issues. By adjusting their balance sheet, they can make the economy respond more like we would expect.