Comparative analysis of quantitative easing and money-financed fiscal stimulus

Jan Lutynski
Additional contact information
Jan Lutynski: Group for Research in Applied Economics (GRAPE)

No 63, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: I study two types of unconventional monetary policy: quantitative easing (QE) and money-financed fiscal stimulus (MFFS), in a modified New Keynesian framework. I compare their effectiveness in stabilizing output and inflation when monetary policy is constrained by the effective lower bound. Money-financed fiscal stimulus performs better than quantitative easing, except the case of the TFP shock. It tends to cause lower inflation and output volatility. Nevertheless, it might be substantially more problematic in implementation as it demands cooperation between the central bank and the fiscal authority. Real reserve targeting (RRT) delivers similar outcomes as quantitative easing but is easier to implement.

Keywords: unconventional monetary policy; quantitative easing; money-financed fiscal stimulus (search for similar items in EconPapers)
JEL-codes: E21 E30 E50 E58 E61 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://grape.org.pl/WP/63_Lutynski_website.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fme:wpaper:63

Access Statistics for this paper

More papers in GRAPE Working Papers from GRAPE Group for Research in Applied Economics Contact information at EDIRC.
Bibliographic data for series maintained by Jan Hagemejer ().