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The central-bank balance sheet as an instrument of monetarypolicy

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Listed author(s):
  • Cúrdia, Vasco
  • Woodford, Michael

Abstract

We extend a standard New Keynesian model to allow an analysis of "unconventional" dimensions of policy alongside traditional interest-rate policy. We find that quantitative easing in the strict sense is likely to be ineffective, but that targeted asset purchases by a central bank can instead be effective when financial markets are sufficiently disrupted, and we discuss the conditions under which such interventions increase welfare. We also discuss optimal policy with regard to the payment of interest on reserves.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304-3932(10)00122-4
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 58 (2011)
Issue (Month): 1 (January)
Pages: 54-79

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Handle: RePEc:eee:moneco:v:58:y:2011:i:1:p:54-79
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

Keywords: Credit policy Quantitative easing Zero lower bound Interest on reserves;

Other versions of this item:

Find related papers by JEL classification:
  • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
  • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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  1. Blogs review: Wallace Neutrality and Balance Sheet Monetary Policy
    by ? in Bruegel blog on 2012-09-10 12:37:48
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