Wall Street QE vs. Main Street Lending.
Eur Econ Rev
; 156: 104475, 2023 Jul.
Article
in English
| MEDLINE | ID: covidwho-2322268
ABSTRACT
Monetary and fiscal authorities reacted swiftly to the COVID-19 pandemic by purchasing assets (or "Wall Street QE") and lending directly to non-financial firms (or "Main Street Lending"). Our paper develops a new framework to compare and contrast these different policies. For the Great Recession, characterized by impaired balance sheets of financial intermediaries, Main Street Lending and Wall Street QE are perfect substitutes and both stimulate aggregate demand. In contrast, for the COVID-19 recession, where non-financial firms faced significant cash flow shortages, Wall Street QE is almost completely ineffective, whereas Main Street Lending can be highly stimulative.
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MEDLINE
Language:
English
Journal:
Eur Econ Rev
Year:
2023
Document Type:
Article
Affiliation country:
J.euroecorev.2023.104475
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