Monetary Policy Stimulus at the Zero Bound is Hard...

Except when it was done in Sweden over the past few years or when it was done between 1933 and 1936 in the U.S. economy.  In both cases short-term interest rates were at 0% and almost all the other characteristics of what a New Keynesian like Matt Rognlie would call a liquidity trap were present.  Monetary policy stimulus, however, proved to be very effective in both economies.

In Sweden, monetary authorities were aggressive with quantitative easing--their central bank's balance sheet rose to 25% of the GDP versus the Fed's 15%--and had an explicit inflation target.  This was enough to push nominal spending back to its pre-crisis, long-run growth path.  FDR also used aggressive monetary stimulus--arguably the original QE program--in conjunction with a price level target to spark a robust recovery that saw real GDP growth average around 8% per annum between 1933 and 1936. And it occurred despite a massive deleveraging by an indebted household sector. Unfortunately, this recovery was cut short by a tightening of monetary and fiscal policy in 1937.

So maybe monetary policy stimulus at the zero bound really isn't that hard after all.  Maybe we have made monetary policy harder than it really needs to be.