“…In this permanent liquidity trap, I investigate the effects of 2 Recently, economists have proposed several types of permanent stagnation. The causes of permanent stagnation advocated by them are deleveraging shocks (Eggertsson and Mehrotra, 2014;Eggertsson et al, 2016), wealth preferences (Michaillat and Saez, 2014;Michau, 2018;Ono and Yamada, 2018), pessimistic expectations (Benigno and Fornaro, 2018), and liquidity preferences (Ono and Ishida, 2014;Illing et al, 2018;Murota, 2018;Ono, 2018).…”