I develop a simple analytical New Keynesian model with a cost channel to gain new insights into the general properties of tax shocks. In this paper, I formally show that the cost channel itself can rule out the sunspot liquidity traps and secure a unique equilibrium with tax shocks. I also...

The global liquidity shock induced by the COVID-19 pandemic raises renewed concern about its impact on the economy. We examine the macroeconomic effect of global liquidity using the Global Vector Autoregression model with the quarterly dataset involving 33 countries. The main empirical results...