Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short-term nominal interest rate renders open-market operations ineffective for achieving macroeconomic stabilization goals. In an earlier paper, we showed that this reasoning does...

The realities of mounting government debt, tax burdens, and an aging population raise serious concerns about the financial legacy confronting future generations. How great a fiscal burden will current policies leave to subsequent generations, and how might changes in those policies alter the...