—the liquidity premium. We rationalize this finding in an estimated heterogeneous-agent New-Keynesian (HANK) model with incomplete … markets and portfolio choice, in which public debt affects private liquidity. In this environment, the short-run fiscal … multiplier is amplified by the countercyclical liquidity premium. This liquidity channel stabilizes investment and crowds in …

assets-the liquidity premium. We rationalize this finding in an estimated heterogeneous-agent New-Keynesian model with … incomplete markets and portfolio choice, in which public debt affects private liquidity. This liquidity channel stabilizes fixed … decline of the liquidity premium, which increases the fiscal burden of debt. We show that the revenue-maximizing level of …