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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

The Federal Reserve is Not Very Constrained by the Lower Bound on Nominal Interest Rates

Swanson, Eric T. - 2018

I survey the literature on monetary policy at the zero lower bound (ZLB) and effective lower bound (ELB) to make three main points: First, the Federal Reserve's forward guidance and large-scale asset purchases are effective monetary policy tools at the Z/ELB. Second, during the 2008–15 U.S....

Persistent link: https://www.econbiz.de/10012909904

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

Has the Financial Crisis Permanently Changed the Practice of Monetary Policy? Has it Changed the Theory of Monetary Policy?

Friedman, Benjamin M. - 2014

I argue in this paper that one of the two forms of hitherto unconventional monetary policy that many central banks have … the central bank's balance sheet as a distinct tool of monetary policy - is likely to become part of the standard toolkit …, forward guidance on the future trajectory of monetary policy has been less successful. Public statements by central banks …

Persistent link: https://www.econbiz.de/10013053846

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

A Lesson from the Great Depression that the Fed Might Have Learned : A Comparison of the 1932 Open Market Purchases with Quantitative Easing

Bordo, Michael D. - 2016

We examine the first QE program through the lens of an open-market operation under taken by the Federal Reserve in 1932, at the height of the Great Depression. This program entailed large purchases of medium- and long-term securities over a four-month period. There were no prior announcements...

Persistent link: https://www.econbiz.de/10012983685

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

Bernanke's No-Arbitrage Argument Revisited : Can Open Market Operations in Real Assets Eliminate the Liquidity Trap?

Eggertsson, Gauti B. - 2016

deflationary to inflationary. We argue that this formalizes Ben Bernanke's arbitrage argument for why a central bank can always …

Persistent link: https://www.econbiz.de/10012992147

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 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