Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short … benefits and facilitate the use of powerful fiscal policy tools even in a liquidity trap. In this paper, we consider an … alternative approach that has been suggested for use in a liquidity trap, a scheduled increase in consumption tax rates. We find …

Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short … stabilization as well even when the economy is expected to remain mired in a liquidity trap for some time. Thus, the microeconomic … fiscal benefits of open-market operations in a liquidity trap go hand in hand with standard macroeconomic objectives …