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What Remains from the Volcker Experiment?

Friedman, Benjamin M. - 2021

Under conventional representations of economic policymaking, any innovation is either (1) a change in the objectives that policymakers are seeking to achieve, (2) a change in the choice of policy instrument, or (3) a change in the way auxiliary aspects of economic activity are used to steer...

Persistent link: https://www.econbiz.de/10013220955

The Effects of Quantitative Easing on Interest Rates : Channels and Implications for Policy

Krishnamurthy, Arvind - 2011

We evaluate the effect of the Federal Reserve's purchase of long-term Treasuries and other long-term bonds ("QE1" in 2008-2009 and "QE2" in 2010-2011) on interest rates. Using an event-study methodology we reach two main conclusions. First, it is inappropriate to focus only on Treasury rates as...

Persistent link: https://www.econbiz.de/10013118848

Liquidity, Business Cycles, and Monetary Policy

Kiyotaki, Nobuhiro - 2012

The paper presents a model of a monetary economy where there are differences in liquidity across assets. Money circulates because it is more liquid than other assets, not because it has any special function. There is a spectrum of returns on assets, reflecting their differences in liquidity. The...

Persistent link: https://www.econbiz.de/10013108309

Conventional and Unconventional Monetary Policy with Endogenous Collateral Constraints

Araújo, Aloísio P. - 2013

We consider the effects of central-bank purchases of a risky asset, financed by issuing riskless nominal liabilities … (reserves), as an additional dimension of policy alongside "conventional" monetary policy (central-bank control of the riskless … common view that large enough central-bank purchases would eventually have to affect asset prices. But even when central …

Persistent link: https://www.econbiz.de/10013071897

Effects of Unconventional Monetary Policy on Financial Institutions

Chodorow-Reich, Gabriel - 2014

Monetary policy affects the real economy in part through its effects on financial institutions. High frequency event studies show the introduction of unconventional monetary policy in the winter of 2008-09 had a strong, beneficial impact on banks and especially on life insurance companies. I...

Persistent link: https://www.econbiz.de/10013052118

Monetary Policy and Real Borrowing Costs at the Zero Lower Bound

Gilchrist, Simon - 2014

This paper compares the effects of conventional monetary policy on real borrowing costs with those of the unconventional measures employed after the target federal funds rate hit the zero lower bound (ZLB). For the ZLB period, we identify two policy surprises: changes in the 2-year Treasury...

Persistent link: https://www.econbiz.de/10013054511

Market Set-Up in Advance of Federal Reserve Policy Decisions

van Dijk, Dick J. C. - 2014

signals. We consider the relative importance of both macro announcements and central bank officials' speeches and …

Persistent link: https://www.econbiz.de/10013060637

The Case for Open-Market Purchases in a Liquidity Trap

Auerbach, Alan J.; Obstfeld, Maurice - 2021

Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short-term nominal interest rate renders open-market operations ineffective for achieving macroeconomic stabilization goals. We show that even were this the case, there remains a...

Persistent link: https://www.econbiz.de/10013231405

Money and Interest Rates with Endogeneously Segmented Markets

Alvarez, Fernando; Atkeson, Andrew; Kehoe, Patrick J. - 2021

This paper analyses the effects of open market operations on interest rates in a model in which agents must pay a fixed cost to exchange assets and cash. Asset markets are endogenously segmented in that some agents choose to pay the fixed cost and some do not. When the fixed cost is zero, the...

Persistent link: https://www.econbiz.de/10013232897

The Great Escape? A Quantitative Evaluation of the Fed's Liquidity Facilities

Del Negro, Marco - 2016

We introduce liquidity frictions into an otherwise standard DSGE model with nominal and real rigidities and ask: Can a shock to the liquidity of private paper lead to a collapse in short-term nominal interest rates and a recession like the one associated with the 2008 U.S. financial crisis? Once...

Persistent link: https://www.econbiz.de/10012991692