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Quantitative Easing in Joseph's Egypt with Keynesian Producers


  • Campbell, Jeffrey R.

    () (Federal Reserve Bank of Chicago)


This paper considers monetary and fiscal policy when tangible assets can be accumulated after shocks that increase desired savings, like Joseph's biblical prophecy of seven fat years followed by seven lean years. The model’s flexible-price allocation mimics Joseph’s saving to smooth consumption. With nominal rigidities, monetary policy that eliminates liquidity traps leaves the economy vulnerable to confidence recessions with low consumption and investment. Josephean Quantitative Easing, a fiscal policy that purchases either obligations collateralized by tangible assets or the assets themselves, eliminates both liquidity traps and confidence recessions by putting a floor under future consumption. This requires no commitment to a time-inconsistent plan.

Suggested Citation

  • Campbell, Jeffrey R., 2014. "Quantitative Easing in Joseph's Egypt with Keynesian Producers," Working Paper Series WP-2014-15, Federal Reserve Bank of Chicago.
  • Handle: RePEc:fip:fedhwp:wp-2014-15

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    References listed on IDEAS

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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Quantitative Easing in Joseph’s Egypt with Keynesian Producers
      by Christian Zimmermann in NEP-DGE blog on 2015-01-20 23:43:07

    More about this item


    Zero Lower Bound; Liquidity Trap; Confidence Recession; Storage; Equilibrium Multiplicity; Competitive Devaluation;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • 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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