This paper studies three types of monetary policy interventions: open market operations (OMO), standing facilities (SF), and lump-sum transfers (LST). Without financial frictions, only money growth rate – and not the specific monetary interventions – matters. Both SF and OMO can be used in...

To better understand liquidity traps, we explicitly model open market operations and standing facilities. With financial frictions, the model is consistent with the observed liquidity traps, and the zero nominal interest rate is the worst steady-state policy. We characterize dynamic exit...