IDEAS home Printed from https://ideas.repec.org/a/fip/fedfel/y2013isept30n2013-28.html
   My bibliography  Save this article

The zero lower bound and longer-term yields

Author

Listed:
  • Eric T. Swanson

Abstract

The Federal Reserve lowered its traditional monetary policy instrument, the federal funds rate, to essentially zero in December 2008. However, economic activity generally depends on interest rates with longer maturities than the overnight fed funds rate. Research shows that interest rates with maturities of two years or more were largely unconstrained by the zero lower bound until at least late 2011. This suggests that, despite the zero bound, the Fed has been able to continue conducting monetary policy through medium- and longer-term interest rates by using forward guidance and large-scale asset purchases.

Suggested Citation

  • Eric T. Swanson, 2013. "The zero lower bound and longer-term yields," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sept30.
  • Handle: RePEc:fip:fedfel:y:2013:i:sept30:n:2013-28
    as

    Download full text from publisher

    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2013/september/zero-lower-bound-interest-rates-long-term-yields/
    Download Restriction: no

    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2013/september/zero-lower-bound-interest-rates-long-term-yields/el2013-28.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ben S. Bernanke & Vincent R. Reinhart, 2004. "Conducting Monetary Policy at Very Low Short-Term Interest Rates," American Economic Review, American Economic Association, vol. 94(2), pages 85-90, May.
    2. Lawrence Christiano & Martin Eichenbaum & Sergio Rebelo, 2011. "When Is the Government Spending Multiplier Large?," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 78-121.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Federal funds rate ; Monetary policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedfel:y:2013:i:sept30:n:2013-28. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Federal Reserve Bank of San Francisco Research Library). General contact details of provider: http://edirc.repec.org/data/frbsfus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.