主题：The Paradox of Money Injections
会议时间：2021 年 10 月 29 日（周五）下午13:30-15:00
This paper compares central bank lending (CBL), open market operations (OMO) and lump-sum transfers with financial frictions. The model is consistent with the observed liquidity traps (LT) and predict that a lower nominal interest rate achieved by CBL or OMO implies tighter borrowing constraints and worse liquidity allocation, because they create differential effects on borrowers and lenders. The zero nominal interest rate is the worst steady-state policy. Compared with CBL, OMO induces additional illiquid effects. We also characterize dynamic exit strategies of LT and find the usual policies to expand the money supply can lead to LT endogenously over time.