The article explores how financial frictions and low interest rates affect the effectiveness of monetary and fiscal policies. By using a DSGE model, the researchers find that when interest rates are near zero, traditional monetary policy may not work well. They suggest that targeting the price level could be more effective than inflation targeting. Additionally, increasing government spending can boost the economy, but the impact is limited due to crowding-out effects. Overall, the study shows that a combination of price-level targeting and fiscal stimulus could help mitigate the negative effects of financial frictions and low interest rates.