Different Unconventional Monetary Policies, Different Stories? A HANK Perspective

Charles de Beauffort () and Ansgar Rannenberg ()
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Charles de Beauffort: National Bank of Belgium, Economics and Research Department
Ansgar Rannenberg: National Bank of Belgium, Economics and Research Department

No 504, Working Paper Research from National Bank of Belgium

Abstract: We develop a two-asset HANK model to examine the effects of various unconventional monetary policies, including Quantitative Easing, Operation Twist, Reserve Management Purchases and Liquidity Facilities. Our analysis focuses on the macrofinancial implications of these policies, as well as their impact on wealth and income inequality through shifts in portfolio composition between liquid and illiquid assets. The model features a financial sector with mutual funds and banks that invest in short- and long-term bonds, reserves, and credit to firms. Calibrating the model to the US economy, we find that Operation Twist has weaker effects than standard QE interventions, although all strategies are qualitatively similar in their impact on output, inflation, and the composition of liquid and illiquid assets. Quantitative Easing and Liquidity Facilities are more effective at the zero lower bound, and are the two policies that raise wealth inequality most.

Keywords: Unconventional monetary policy; Quantitative easing; Operation Twist; Heterogeneous agents; Zero lower bound; Wealth and income inequality. (search for similar items in EconPapers)
JEL-codes: D31 E12 E44 E52 E58 G23 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2026-10
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:202610-504

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