The Fed can stimulate nominal demand at the ZLB. But (outside of times when it’s correcting the results of overly tight monetary conditions) that means mostly more inflation, and has strongly diminishing returns on increased real consumption.
The Fed can stimulate nominal demand at the ZLB. But (outside of times when it’s correcting the results of overly tight monetary conditions) that means mostly more inflation, and has strongly diminishing returns on increased real consumption.