Unconventional government debt purchases as a supplement to conventional monetary policy

Martin Ellison and Andreas Tischbirek

No 679, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: In response to the Great Financial Crisis, the Federal Reserve, the Bank of England and many other central banks have adopted unconventional monetary policy instruments. We investigate if one of these, purchases of long-term government debt, could be a valuable addition to conventional short-term interest rate policy even if the main policy rate is not constrained by the zero lower bound. To do so, we add a stylised financial sector and central bank asset purchases to an otherwise standard New Keynesian DSGE model. Asset quantities matter for interest rates through a preferred habitat channel. If conventional and unconventional monetary policy instruments are coordinated appropriately then the central bank is better able to stabilise both output and inflation.

Keywords: Quantitative Easing; Large-Scale Asset Purchases; Preferred Habitat; Optimal Monetary Policy (search for similar items in EconPapers)
JEL-codes: E40 E43 E52 E58 (search for similar items in EconPapers)
Date: 2013-10-16
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:f6f32de6-0548-46ed-adf8-98c6f9c06404 (text/html)

Related works:
Journal Article: Unconventional government debt purchases as a supplement to conventional monetary policy (2014)
Working Paper: Unconventional government debt purchases as a supplement to conventional monetary policy (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:679

Access Statistics for this paper

More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Anne Pouliquen ( this e-mail address is bad, please contact ).