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The central-bank balance sheet as an instrument of monetarypolicy

Vasco Cúrdia () and Michael Woodford ()

Journal of Monetary Economics, 2011, vol. 58, issue 1, pages 54-79

Abstract: We extend a standard New Keynesian model to allow an analysis of "unconventional" dimensions of policy alongside traditional interest-rate policy. We find that quantitative easing in the strict sense is likely to be ineffective, but that targeted asset purchases by a central bank can instead be effective when financial markets are sufficiently disrupted, and we discuss the conditions under which such interventions increase welfare. We also discuss optimal policy with regard to the payment of interest on reserves.

Keywords: Credit; policy; Quantitative; easing; Zero; lower; bound; Interest; on; reserves (search for similar items in EconPapers)
Date: 2011
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Working Paper: The central-bank balance sheet as an instrument of monetary policy (2010) Downloads
Working Paper: The Central-Bank Balance Sheet as an Instrument of Monetary Policy (2010) Downloads
Working Paper: The Central Bank's Balance Sheet as an Instrument of Monetary Policy (2010) Downloads
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