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On targeting frameworks and optimal monetary policy

Bodenstein, Martin; Zhao, Junzhu - 2017

Speed limit policy, a monetary policy strategy that focuses on stabilizing inflation and the change in the output gap, consistently delivers better welfare outcomes than flexible inflation targeting or flexible price level targeting in empirical New Keynesian models when policymakers lack the...

Persistent link: https://www.econbiz.de/10011803173

The Federal Reserve's Balance Sheet : A Primer and Projections

Carpenter, Seth B. - 2013

Over the past few years, the Federal Reserve's use of unconventional monetary policy tools has led it to hold a large portfolio of securities. The securities holdings in excess of historical norms have been shown to be putting downward pressure on longer-term interest rates. One question asked...

Persistent link: https://www.econbiz.de/10013089251

"Unconventional" monetary policy as conventional monetary policy : a perspective from the U.S. in the 1920s

Carlson, Mark; Duygan-Bump, Burcu - 2018

To implement monetary policy in the 1920s, the Federal Reserve utilized administered interest rates and conducted open market operations in both government securities and private money market securities, sometimes in fairly considerable amounts. We show how the Fed was able to effectively use...

Persistent link: https://www.econbiz.de/10011927094

Did the Founding of the Federal Reserve Affect the Vulnerability of the Interbank System to Systemic Risk?

Carlson, Mark - 2016

during the 19th century to facilitate interregional payments and flows of liquidity and credit. Vast sums moved through the … the system's resilience to solvency and liquidity shocks and whether these shocks might have been contagious. We find that … the interbank system became more resilient to solvency shocks but less resilient to liquidity shocks as banks sharply …

Persistent link: https://www.econbiz.de/10013210432

Arbitrage, Liquidity and Exit : The Repo and Federal Funds Markets Before, During, and Emerging from the Financial Crisis

Klee, Elizabeth - 2012

closely related money markets, pricing of risk, and liquidity effects, and then shows how these could interact if the Federal … Reserve removes the substantial amount of liquidity currently in the federal funds market. The results suggest that pass …, which are unsecured loans, indicated a marked jump in perceived credit risk. Moreover, the liquidity effect for the federal …

Persistent link: https://www.econbiz.de/10013106789

The effects of liquidity regulation on bank demand in monetary policy operations

Rezende, Marcelo; Styczynski, Mary-Frances; Vojtech, … - 2016

We estimate the effects of the liquidity coverage ratio (LCR), a liquidity requirement for banks, on the tenders that … term deposits qualify for the LCR. These results suggest that liquidity regulation affects bank demand in monetary policy …

Persistent link: https://www.econbiz.de/10011578907

The costs and benefits of liquidity regulations : lessons from an idle monetary policy tool

Curfman, Christopher J.; Kandrac, John - 2019

We investigate how liquidity regulations affect banks by examining a dormant monetary policy tool that functions as a … liquidity regulation. Our identification strategy uses a regression kink design that relies on the variation in a marginal high … credit supply. Liquidity requirements also depress banks' profitability, though some of the regulatory costs are passed on to …

Persistent link: https://www.econbiz.de/10012181216

Pandemic Recession Dynamics : The Role of Monetary Policy in Shifting a U-Shaped Recession to a V-Shaped Rebound

Kiley, Michael T. - 2020

COVID-19 has depressed economic activity around the world. The initial contraction may be amplified by the limited space for conventional monetary policy actions to support recovery implied by the low level of nominal interest rates recently. Model simulations assuming an initial contraction in...

Persistent link: https://www.econbiz.de/10014048734

Issues Regarding the Use of the Policy Rate Tool

Campbell, Jeffrey R.; King, Thomas B.; Orlik, Anna; … - 2020

We review two nonstandard uses of the policy rate tool, which provide additional stimulus when interest rates are close to or at the effective lower bound—forward guidance and negative interest rate policy. In particular, we survey the use of these tools since the star otf the Great Recession,...

Persistent link: https://www.econbiz.de/10014048768

Assessing the Effects of the Zero-Interest-Rate Policy Through the Lens of a Regime-Switching DSGE Model

Chen, Han - 2014

Standard dynamic stochastic general equilibrium (DSGE) models assume a Taylor rule and forecast an increase in interest rates immediately after the 2007-2009 economic recession given the predicted output and inflation, contradictory to the extended period of near-zero interest rate policy (ZIRP)...

Persistent link: https://www.econbiz.de/10013052892