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This paper addresses the possible role of bond prices as operating or intermediate targets for monetary policy. The paper begins with a brief review of the mechanisms through which a central bank could, in theory, influence long-term interest rates, and continues with a brief narrative overview...
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The paper generalizes the Taylor principle---the proposition that central banks can stabilize the macroeconomy by raising their interest rate instrument more than one-for-one in response to higher inflation---to an environment in which reaction coefficients in the monetary policy rule evolve...
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ensuring that liquidity would be distributed to those institutions that needed it most. Conceptually, this meant America …
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"Financial systems are inherently fragile because of the very function which makes them valuable: liquidity … transformation. Regulatory reforms can strengthen the financial system and decrease the risk of liquidity crises, but they cannot … between monetary policy and liquidity transformation 'optimal' monetary policy would consist of a modified Taylor rule in …
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