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Tangible Quantitative Easing

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  • Campbell, Jeffrey

Abstract

This paper considers macroeconomic policy in a New Keynesian economy when households wish to move consumption into the future using a storage technology. Even if monetary policy successfully equates the real rate of interest with the natural rate, the economy is vulnerable to recessions with both low consumption and low savings. Tangible Quantitative Easing, debt-financed public purchases of tangible assets, eliminates these recessions by putting a floor under future consumption. This requires no commitment to a time-inconsistent plan.

Suggested Citation

  • Campbell, Jeffrey, 2024. "Tangible Quantitative Easing," CEPR Discussion Papers 19751, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19751
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    File URL: https://cepr.org/publications/DP19751
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    Keywords

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    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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