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The Federal Reserve’s unconventional policies

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Abstract

After the federal funds rate target was lowered to near zero in 2008, the Federal Reserve has used two types of unconventional monetary policies to stimulate the U.S. economy: forward policy guidance and large-scale asset purchases. These tools have been effective in pushing down longer-term Treasury yields and boosting other asset prices, thereby lifting spending and the economy. This Letter is adapted from a presentation by the president and CEO of the Federal Reserve Bank of San Francisco at the University of California, Irvine, on November 5, 2012.

Suggested Citation

  • John C. Williams, 2012. "The Federal Reserve’s unconventional policies," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov13.
    • Handle: RePEc:fip:fedfel:y:2012:i:nov13:n:2012-34
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    References listed on IDEAS

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    1. Eric T. Swanson & John C. Williams, 2014. "Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates," American Economic Review, American Economic Association, vol. 104(10), pages 3154-3185, October.
    2. Svensson, Lars-E-O, 2001. "The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(S1), pages 277-312, February.
    3. Adam, Klaus & Billi, Roberto M., 2007. "Discretionary monetary policy and the zero lower bound on nominal interest rates," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 728-752, April.
    4. John C. Williams, 2012. "Monetary policy, money, and inflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue july9.
    5. repec:fip:fedfsp:y:2012:i:july2 is not listed on IDEAS
    6. Eric T. Swanson, 2011. "Let's Twist Again: A High-Frequency Event-study Analysis of Operation Twist and Its Implications for QE2," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 151-207.
    7. repec:fip:fedfsp:y:2012:i:july9:n:2012-21 is not listed on IDEAS
    8. Campbell, John Y. (ed.), 2008. "Asset Prices and Monetary Policy," National Bureau of Economic Research Books, University of Chicago Press, number 9780226092119, December.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The ECB's Not-So-Sweet 16th
      by Kermit Schoenholtz in Huffington Post Business on 2015-01-13 21:50:42
    2. The ECB's Not-So-Sweet 16th
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2015-01-05 19:55:48

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    Cited by:

    1. Eksi, Ozan & Tas, Bedri Kamil Onur, 2017. "Unconventional monetary policy and the stock market’s reaction to Federal Reserve policy actions," The North American Journal of Economics and Finance, Elsevier, vol. 40(C), pages 136-147.
    2. Taisuke Nakata & Takeki Sunakawa, 2019. "Credible Forward Guidance," Finance and Economics Discussion Series 2019-037, Board of Governors of the Federal Reserve System (U.S.).
    3. Williams, John C., 2013. "A defense of moderation in monetary policy," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 137-150.
    4. Lars E.O. Svensson, 2014. "Forward Guidance," NBER Working Papers 20796, National Bureau of Economic Research, Inc.
    5. John C. Williams, 2014. "Accommodative monetary policy: savior or saboteur?," Speech 132, Federal Reserve Bank of San Francisco.
    6. Fumio Hayashi & Junko Koeda, 2014. "Exiting from QE," NBER Working Papers 19938, National Bureau of Economic Research, Inc.
    7. Tatsuki Okamoto & Yoichi Matsubayashi, 2017. "Empirical Evidence from a Japanese Lending Survey within the TVP-VAR Framework: Does the Credit Channel Matter for Monetary Policy?," Discussion Papers 1709, Graduate School of Economics, Kobe University.
    8. Mamaysky, Harry, 2018. "The time horizon of price responses to quantitative easing," Journal of Banking & Finance, Elsevier, vol. 90(C), pages 32-49.
    9. Fernando J. Pérez Forero, 2017. "Measuring the Stance of Monetary Policy in a Time-Varying," Working Papers 102, Peruvian Economic Association.
    10. Lars E.O. Svensson, 2015. "Day One Keynote Address: Forward Guidance," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 19-64, September.

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