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Outside the Box: Unconventional Monetary Policy in the Great Recession and Beyond

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This paper provides an overview of unconventional monetary policy as implemented by the U.S. Federal Reserve after the global financial crisis. First, it reviews the key features of the Fed’s Quantitative Easing and Forward Guidance policies. Second, it discusses the mechanisms through which the two policies may have affected financial markets, institutions, and the overall economy. Third, it surveys the evidence on the policies’ financial and economic impacts. Fourth, it considers some of the policies’ unintended side effects. The paper concludes with some thoughts on how unconventional monetary policy might be used in the future.

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  • Kenneth N. Kuttner, 2018. "Outside the Box: Unconventional Monetary Policy in the Great Recession and Beyond," Department of Economics Working Papers 2018-04, Department of Economics, Williams College.
  • Handle: RePEc:wil:wileco:2018-04
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    File URL: https://web.williams.edu/Economics/wp/Kuttner_OutsideTheBox.pdf
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    1. Stefania D’Amico & William English & David López‐Salido & Edward Nelson, 2012. "The Federal Reserve's Large‐scale Asset Purchase Programmes: Rationale and Effects," Economic Journal, Royal Economic Society, vol. 122(564), pages 415-446, November.
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    5. Kuttner, Kenneth N., 2001. "Monetary policy surprises and interest rates: Evidence from the Fed funds futures market," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 523-544, June.
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    11. Robert J. Kurtzman & Stephan Luck & Thomas Zimmermann, 2017. "Did QE Lead Banks to Relax Their Lending Standards? Evidence from the Federal Reserve's LSAPs," Finance and Economics Discussion Series 2017-093, Board of Governors of the Federal Reserve System (US).
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    13. Neely, Christopher J., 2015. "Unconventional monetary policy had large international effects," Journal of Banking & Finance, Elsevier, vol. 52(C), pages 101-111.
    14. Mark Gertler & Peter Karadi, 2013. "QE 1 vs. 2 vs. 3. . . : A Framework for Analyzing Large-Scale Asset Purchases as a Monetary Policy Tool," International Journal of Central Banking, International Journal of Central Banking, vol. 9(1), pages 5-53, January.
    15. Michael D. Bauer & Glenn D. Rudebusch, 2014. "The Signaling Channel for Federal Reserve Bond Purchases," International Journal of Central Banking, International Journal of Central Banking, vol. 10(3), pages 233-289, September.
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    18. Torsten Ehlers, 2012. "The effectiveness of the Federal Reserve's Maturity Extension Program - Operation Twist 2: the portfolio rebalancing channel and public debt management," BIS Papers chapters,in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 245-255 Bank for International Settlements.
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    Cited by:

    1. Lakdawala, Aeimit & Bauer, Michael & Mueller, Philippe, 2019. "Market-Based Monetary Policy Uncertainty," Working Papers 2019-2, Michigan State University, Department of Economics.
    2. Ricardo J. Caballero & Gunes Kamber, 2019. "On the Global Impact of Risk-off Shocks and Policy-put Frameworks," NBER Working Papers 26031, National Bureau of Economic Research, Inc.
    3. Bernd Hayo & Kai Henseler & Marc Steffen Rapp, 2019. "Complexity of ECB Communication and Financial Market Trading," MAGKS Papers on Economics 201919, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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