This paper disentangles the effectiveness of quantitative easing (QE) into two channels: Liquidity (injecting liquidity into the market) and interest rate (twisting the term yield). Through a general equilibrium model with household heterogeneity and financial friction, I demonstrate that they...

"While many analyses of monetary policy consider only a target for a short-term nominal interest rate, other dimensions of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets acquired by central banks, and changes in the interest rate...