I just read into Tomas Palley’s ‘Why Negative Interest Rate Policy (NIRP) is Ineffective and Dangerous‘, which is a very good paper. There is one paragraph thought where Palley seems to contradict Koo, who is an expert on QE and Japan:
Monetary policy works by decreasing the money market risk free interest rate, lowering the price of credit and the return on money. That induces firms to change the composition of their financing and asset holdings. A negative interest rate will have several effects. First, firms will switch from equity finance to loan finance because loan finance is cheaper. They can do this via debt financed share buybacks and special dividends to shareholders, which is exactly what has been happening since the 2008 recession. The result is increased corporate indebtedness and more leveraged balance sheets.