While working on a project in its very early stages, I stumbled upon this paper by Mankiw and Weinzierl from 2011 in the Brookings Papers of Economic Activity. It is a very simple macro model with monetary and fiscal policy where the economy can hit the zero lower bound. I found this paper very interesting for two main reasons:
- it discusses a lot of issues (monetary policy through short-term rate vs long-term money supply, zero lower bound, role of fiscal policy) in a very simple framework; and
- this framework can be adapted to study the interaction of monetary policy with other policies—for instance, financial regulation—especially in the zero lower bound.
It is also quite thought-provoking to read the discussants and the general discussion: particularly useful to get ideas for future research.