We develop a dynamic general equilibrium model to analyze the effects of central bank purchases of government bonds by investigating the following three questions: Under what conditions are these purchases socially desirable, what incentive problems do they mitigate, and how large are these...

We develop a microfounded model, where agents have the possibility to trade money for government bonds in an over-the-counter market. It allows us to address important open questions about the effects of central bank purchases of government bonds, these being: under what conditions these...

We develop a dynamic general equilibrium model to analyze the optimal quantity of liquid bonds by investigating the following three questions: Under what conditions is it socially desirable to contract the bond supply, what incentive problems are mitigated by doing this, and how large are the...

We develop a dynamic general equilibrium model to analyze the optimal quantity of liquid bonds by investigating the following three questions: Under what conditions is it socially desirable to contract the bond supply, what incentive problems are mitigated by doing this, and how large are the...