Wall street QE vs. main street lending: A comment

Caterina Mendicino

European Economic Review, 2024, vol. 161, issue C

Abstract: Are direct lending to non-financial firms (Main Street Lending) and asset pur- chases (Wall Street QE) substitute or complementary policies? Which financial frictions are most effectively addressed by each of them? The paper by Cardamone et al. (2023) addresses these questions by contrasting the effectiveness of central bank asset purchases and direct lending to non-financial corporations through the lens of a tractable macro-banking model. Their results show that Main Street Lending is highly stimulative for COVID-19 type recessions which are characterized by significant cash flow shortages for non-financial firms. Wall Street QE is instead only effective in recessions featuring an impairment of the balance sheet of financial intermediaries, such as the 2007–2009 Great recession.

Keywords: Unconventional monetary policy; Financial frictions; DSGE (search for similar items in EconPapers)
JEL-codes: E13 E44 E58 F38 F41 G01 G21 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:161:y:2024:i:c:s0014292123001976

DOI: 10.1016/j.euroecorev.2023.104569

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