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Conventional and Unconventional Monetary Policy with Endogenous Collateral Constraints

Araújo, Aloísio - 2013

nominal interest rate), in a general-equilibrium model of asset pricing and risk sharing with endogenous collateral … constraints of the kind proposed by Geanakoplos (1997). The existence of collateral constraints allows our model to capture the …-bank purchases raise the price of the asset, owing to binding collateral constraints, the effects need not be the ones commonly …

Persistent link: https://www.econbiz.de/10012458952

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/10012458436

Two Monetary Tools : Interest Rates and Haircuts

Ashcraft, Adam - 2010

We study a production economy with multiple sectors financed by issuing securities to agents who face capital constraints. Binding capital constraints propagate business cycles, and a reduction of the interest rate can increase the required return of high-haircut assets since it can increase the...

Persistent link: https://www.econbiz.de/10012462319

Optimal Monetary Policy with Collateralized Household Debt and Borrowing Constraints

Monacelli, Tommaso - 2006

. Private debt reflects equilibrium trade between an impatient borrower, who faces an endogenous collateral constraint, and a … borrower's collateral constraint. We find that the optimal volatility of inflation is increasing in three key parameters: (i …

Persistent link: https://www.econbiz.de/10012466194

The Effects of Conventional and Unconventional Monetary Policy on Exchange Rates

Inoue, Atsushi - 2018

What are the effects of monetary policy on exchange rates? And have unconventional monetary policies changed the way monetary policy is transmitted to international financial markets? According to conventional wisdom, expansionary monetary policy shocks in a country lead to that country's...

Persistent link: https://www.econbiz.de/10012480674

QE in the future : the central bank’s balance sheet in a fiscal crisis

Reis, Ricardo - 2016

Analysis of quantitative easing (QE) typically focus on the recent past studying the policy's effectiveness during a financial crisis when nominal interest rates are zero. This paper examines instead the usefulness of QE in a future fiscal crisis, modeled as a situation where the fiscal outlook...

Persistent link: https://www.econbiz.de/10012456262

Quantitative Easing and Financial Stability

Woodford, Michael - 2016

intended effects of the policies), and their possible collateral effects on financial stability. The present paper compares …

Persistent link: https://www.econbiz.de/10012456390

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 - 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/10012456098

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/10012461102

Pledgability and Liquidity : A New Monetarist Model of Financial and Macroeconomic Activity

Venkateswaran, Venky - 2013

When limited commitment hinders unsecured credit, assets help by serving as collateral. We study models where assets …-pricing theory, is calibrated to analyze the effects of monetary policy and financial innovation. We show that inflation can raise …

Persistent link: https://www.econbiz.de/10012459653