This paper assesses the impact of the various “unconventional” U.S. Federal Reserve policies and fiscal policies, introduced during the 2007–09 financial crisis period, on credit market spreads. I also examine the impact of the “conventional” monetary policy stance, defined as the...

Several aspects of the difficulties of policy at the zero lower bound are discussed: The difficulty of credible commitment to higher future inflation, as most New Keynesian models imply is necessary; the need for fiscal and monetary policy coordination; and the pitfalls in the taking of...

Although central banks recently expanded their balance sheets by unconventional policy actions, little theory is available to explain how and when central banks’ balance sheets affect inflation and impose restrictions on monetary policy. A DSGE model predicts that central banks’ balance...

This paper investigates the conduct of monetary and fiscal policy in the post-ERM period in the United Kingdom. Using a simple DSGE New Keynesian model of non-cooperative monetary and fiscal policy interactions under fiscal intraperiod leadership, we demonstrate that the past policy in the...

The United States introduced several programs in response to the financial crisis. We examine responses involving Treasury debt—the Term Securities Lending Facility (TSLF), Supplementary Financing Program (SFP), Treasury issuance, open-market operations—and associated impacts on...

This paper examines the effect of European Central Bank (ECB) communication on the price discovery process in the Euribor futures market using a new tick-by-tick data set. First, we show that two pieces of news systematically hit financial markets on Governing Council meeting days: the ECB...

Most central banks explain interest rate decisions, i.e., they provide a story. With committee decisions, it can be difficult to find a story that is both consistent with the decision and representative for the committee. We consider two alternative procedures: (i) vote on the interest rate and...

We investigate whether the anchoring properties of longrun inflation expectations in the United States, the euro area, and the United Kingdom have changed around the economic crisis that erupted in mid-2007. We document that surveybased measures of long-run inflation expectations remained fairly...

This paper specifies a new convenient algorithm to construct policy projections conditional on alternative anticipated policy rate paths in linearized dynamic stochastic general equilibrium (DSGE) models, such as Ramses, the Riksbank’s main DSGE model. Such projections with anticipated policy...

This paper investigates the impact of the Bank of England’s quantitative easing policy on UK asset prices. Based on analysis of the reaction of financial market prices and modelbased estimates, we find that asset purchases financed by the issuance of central bank reserves - which by February...