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Open Market Operations

Listed author(s):
  • Sylvia Xiao

    (University of Wisconsin-Madison)

  • Randall Wright

    (University of Wisconsin)

  • Guillaume Rocheteau

    (University of California, Irvine)

Registered author(s):

    We develop models with liquid government bonds and currency to analyze monetary policy, especially open market operations. Various specifications are considered for market structure, and for the liquidity — i.e., acceptability or pledgeability — of money and bonds in their roles as media of exchange or collateral. Theory delivers sharp policy predictions. It can also generate negative nominal yields, endogenous market segmentation, liquidity traps, and nominal prices or interest rates that appear sluggish. Differences in acceptability or pledgeability are not simply assumed; they are endogenized using information frictions. This naturally generates multiple equilibria, but conditional on selection, we still deliver sharp predictions.

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    File URL: https://economicdynamics.org/meetpapers/2017/paper_345.pdf
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    Paper provided by Society for Economic Dynamics in its series 2017 Meeting Papers with number 345.

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    Date of creation: 2017
    Handle: RePEc:red:sed017:345
    Contact details of provider: Postal:
    Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

    Web page: http://www.EconomicDynamics.org/
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