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The Economic Logic of the Yield‐Curve Control Policy

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  • Eduardo Pol

Abstract

Unconventional monetary policies are currently implemented in several advanced economies. One of them is known as “yield‐curve control,” a policy presently active in Australia. Ordinary pictorial descriptions of this policy do not usually discuss the market mechanism presupposed by the yield‐curve control approach nor the economic logic underpinning the expected outcome of this policy tool. The present letter adopts a pedagogical approach and provides an exposition of yield‐curve control that separates the immediate effects of the policy from their concomitant economic effects on spending and portfolio investment.

Suggested Citation

  • Eduardo Pol, 2022. "The Economic Logic of the Yield‐Curve Control Policy," Economic Papers, The Economic Society of Australia, vol. 41(1), pages 78-88, March.
    • Handle: RePEc:bla:econpa:v:41:y:2022:i:1:p:78-88
    DOI: 10.1111/1759-3441.12317
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