I study two types of unconventional monetary policy: quantitative easing (QE) and money-financed fiscal stimulus (MFFS), in a modified New Keynesian framework. I compare their effectiveness in stabilizing output and inflation when monetary policy is constrained by the effective lower bound. Money-financed fiscal stimulus performs better than quantitative easing, except the case of the TFP shock. It tends to cause lower inflation and output volatility. Nevertheless, it might be substantially more problematic in implementation as it demands cooperation between the central bank and the fiscal authority. Real reserve targeting (RRT) delivers similar outcomes as quantitative easing but is easier to implement.
Unpublished version
2021
@article{lutynski2021comparative,
title={Comparative analysis of quantitative easing and money-financed fiscal stimulus},
author={Luty{\'n}ski, Jan},
institution={Group for Research in APplied Economics},
number={63},
year={2021}
}