Ferrante, Francesco; Paustian, Matthias - 2019
and borrow, subject to a borrowing constraint. We show that, in this framework, forward guidance, that is the promise by … liquidity trap. In our model, the power of forward guidance is amplified by three redistributive channels, absent in a … liquidity trap, and can make forward guidance more powerful in a HANK model than in a RANK framework. These results contrast …