IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfn/2017-01-09-2.html
   My bibliography  Save this paper

Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization

Author

Listed:
  • Michele Cavallo
  • Marco Del Negro
  • W. Scott Frame
  • Jamie Grasing
  • Benjamin A. Malin
  • Carlo Rosa

Abstract

This Note summarizes analysis conducted in our recent FEDS working paper that seeks to understand the fiscal implications of the Federal Reserve's balance sheet normalization program.

Suggested Citation

  • Michele Cavallo & Marco Del Negro & W. Scott Frame & Jamie Grasing & Benjamin A. Malin & Carlo Rosa, 2018. "Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization," FEDS Notes 2017-01-09, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfn:2017-01-09-2
    DOI: 10.17016/2380-7172.2126
    as

    Download full text from publisher

    File URL: https://www.federalreserve.gov/econres/notes/feds-notes/fiscal-implications-of-the-federal-reserve-balance-sheet-normalization-20180109.htm
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Takatoshi Ito & Andrew K. Rose, 2006. "Introduction to EASE-15: Monetary Policy with Very Low Inflation in the Pacific Rim," NBER Chapters, in: Monetary Policy with Very Low Inflation in the Pacific Rim, pages 1-6, National Bureau of Economic Research, Inc.
    2. Peter Stella, 1997. "Do Central Banks Need Capital?," IMF Working Papers 1997/083, International Monetary Fund.
    3. Arthur Galego Mendes & Tiago Couto Berriel, "undated". "Central Bank Balance Sheet, Liquidity Trap, and Quantitative Easing," Textos para discussão 638, Department of Economics PUC-Rio (Brazil).
    4. Cukierman, Alex, 2008. "Central bank independence and monetary policymaking institutions -- Past, present and future," European Journal of Political Economy, Elsevier, vol. 24(4), pages 722-736, December.
    5. Marvin Goodfriend, 2014. "Monetary Policy as a Carry Trade," IMES Discussion Paper Series 14-E-08, Institute for Monetary and Economic Studies, Bank of Japan.
    6. Amador, Manuel & Bianchi, Javier & Bocola, Luigi & Perri, Fabrizio, 2016. "Reverse speculative attacks," Journal of Economic Dynamics and Control, Elsevier, vol. 72(C), pages 125-137.
    7. Takatoshi Ito & Andrew K. Rose, 2006. "Monetary Policy with Very Low Inflation in the Pacific Rim," NBER Books, National Bureau of Economic Research, Inc, number ito_06-1, June.
    8. Peter Stella, 2008. "Central Bank Financial Strength, Policy Constraints and Inflation," IMF Working Papers 08/49, International Monetary Fund.
    9. Benigno, Pierpaolo, 2016. "Designing Central Banks for Inflation Stability," CEPR Discussion Papers 11402, C.E.P.R. Discussion Papers.
    10. Ricardo Reis, 2013. "The Mystique Surrounding the Central Bank's Balance Sheet, Applied to the European Crisis," American Economic Review, American Economic Association, vol. 103(3), pages 135-140, May.
    11. Peter Stella, 1997. "Do Central Banks Need Capital?," IMF Working Papers 97/83, International Monetary Fund.
    12. Gauti Eggertsson & Bulat Gafarov & Saroj Bhatarai, 2014. "Time Consistency and the Duration of Government Debt: A Signalling Theory of Quantitative Easing," 2014 Meeting Papers 1292, Society for Economic Dynamics.
    13. Adrian, Tobias & Crump, Richard K. & Moench, Emanuel, 2013. "Pricing the term structure with linear regressions," Journal of Financial Economics, Elsevier, vol. 110(1), pages 110-138.
    14. W. Scott Frame & Lawrence J. White, 2005. "Fussing and Fuming over Fannie and Freddie: How Much Smoke, How Much Fire?," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 159-184, Spring.
    15. Del Negro, Marco & Sims, Christopher A., 2015. "When does a central bank׳s balance sheet require fiscal support?," Journal of Monetary Economics, Elsevier, vol. 73(C), pages 1-19.
    16. Ito, Takatoshi & Rose, Andrew K. (ed.), 2006. "Monetary Policy with Very Low Inflation in the Pacific Rim," National Bureau of Economic Research Books, University of Chicago Press, number 9780226378978, March.
    17. McLaren, Nick & Smith, Tom, 2013. "The profile of cash transfers between the Asset Purchase Facility and Her Majesty’s Treasury," Bank of England Quarterly Bulletin, Bank of England, vol. 53(1), pages 29-37.
    18. Fujiki, Hiroshi & Tomura, Hajime, 2017. "Fiscal cost to exit quantitative easing: the case of Japan," Japan and the World Economy, Elsevier, vol. 42(C), pages 1-11.
    19. Claudia H Dziobek & John W. Dalton, 2005. "Central Bank Losses and Experiences in Selected Countries," IMF Working Papers 05/72, International Monetary Fund.
    20. Marco Bassetto & Todd Messer, 2013. "Fiscal Consequences of Paying Interest on Reserves," Fiscal Studies, Institute for Fiscal Studies, vol. 34, pages 413-436, December.
    21. Marvin Goodfriend, 2014. "Keynote Speech: Monetary Policy as a Carry Trade," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 32, pages 29-44, November.
    22. Peter Stella & Ulrich H Klueh, 2008. "Central Bank Financial Strength and Policy Performance; An Econometric Evaluation," IMF Working Papers 08/176, International Monetary Fund.
    23. Igor Goncharov & Vasso Ioannidou & Martin C. Schmalz, 2017. "(Why) Do Central Banks Care About Their Profits?," CESifo Working Paper Series 6546, CESifo.
    24. David Greenlaw & James D. Hamilton & Peter Hooper & Frederic S. Mishkin, 2013. "Crunch Time: Fiscal Crises and the Role of Monetary Policy," NBER Working Papers 19297, National Bureau of Economic Research, Inc.
    25. Eric S. Rosengren, 2013. "Comments on the paper “Crunch time: fiscal crises and the role of monetary policy”," Speech 66, Federal Reserve Bank of Boston.
    26. Eric M. Engen & Thomas Laubach & David L. Reifschneider, 2015. "The Macroeconomic Effects of the Federal Reserve's Unconventional Monetary Policies," Finance and Economics Discussion Series 2015-5, Board of Governors of the Federal Reserve System (U.S.).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lorenzo Esposito & Giuseppe Mastromatteo, "undated". "In the Long Run We Are All Herd: On the Nature and Outcomes of the Beauty Contest," Economics Working Paper Archive wp_972, Levy Economics Institute.
    2. Jörg Bibow, 2018. "Unconventional monetary policies and central bank profits," IMK Studies 62-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Huixin Bi & Wenyi Shen & Shu-Chun Susan Yang, 2019. "Fiscal Implications of Interest Rate Normalization in the United States," IMF Working Papers 2019/090, International Monetary Fund.
    4. Sayuri Shirai & Eric Alexander Sugandi, 2019. "Cross-Border Portfolio Investment and Financial Markets Development in the Asia and Pacific Region," International Business Research, Canadian Center of Science and Education, vol. 12(5), pages 14-33, May.
    5. Sayuri Shirai & Eric Alexander Sugandi, 2018. "Cross- Border Portfolio Investment and Financial Integration in Asia and the Pacific Region," Working Papers id:12817, eSocialSciences.
    6. Shirai, Sayuri & Sugandi, Eric, 2018. "Cross-Border Portfolio Investment and Financial Integration in Asia and the Pacific Region," ADBI Working Papers 841, Asian Development Bank Institute.
    7. Hess Chung & Etienne Gagnon & Taisuke Nakata & Matthias Paustian & Bernd Schlusche & James Trevino & Diego Vilan & Wei Zheng, 2019. "Monetary Policy Options at the Effective Lower Bound : Assessing the Federal Reserve's Current Policy Toolkit," Finance and Economics Discussion Series 2019-003, Board of Governors of the Federal Reserve System (U.S.).
    8. Mark A. Carlson & Stefania D'Amico & Cristina Fuentes-Albero & Bernd Schlusche & Paul R. Wood, 2020. "Issues in the Use of the Balance Sheet Tool," Finance and Economics Discussion Series 2020-071, Board of Governors of the Federal Reserve System (U.S.).
    9. Michal Franta & Tomas Holub & Branislav Saxa, 2018. "Balance Sheet Implications of the Czech National Bank's Exchange Rate Commitment," Working Papers 2018/10, Czech National Bank.
    10. Joerg Bibow, 2018. "Unconventional Monetary Policies and Central Bank Profits: Seigniorage as Fiscal Revenue in the Aftermath of the Global Financial Crisis," Economics Working Paper Archive wp_916, Levy Economics Institute.
    11. Hess Chung & Etienne Gagnon & Taisuke Nakata & Matthias Paustian & Bernd Schlusche & James Trevino & Diego Vilán & Wei Zheng, 2020. "Monetary Policy Options at the Effective Lower Bound: Assessing the Federal Reserve’s Current Policy Toolkit," CARF F-Series CARF-F-483, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:fedgfn:2017-01-09-2. 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: (). General contact details of provider: http://edirc.repec.org/data/frbgvus.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.