Central Bank Liquidity Management and “Unconventional” Monetary Policies

Javier García-Cicco (javier_garcia@uca.edu.ar) and Enrique Kawamura
Authors registered in the RePEc Author Service: Javier Garcia Cicco

Economía Journal, 2014, vol. Volume 15 Number 1, issue Fall 2014, 39-87

Abstract: We present a small-open-economy model to analyze the role of central bank’s liquidity management in implementing “unconventional” monetary policies within an inflation targeting framework. In particular, we explicitly model the facilities that the central bank uses to manage the liquidity in the economy, which creates a role for the central bank balance sheet in equilibrium. This allows analyzing two “unconventional” policies: sterilized exchange-rate interventions and expanding the list of eligible collaterals accepted at the liquidity facilities operated by the central bank. These policies have been recently implemented by several central banks: the former as a way to counteract persistent appreciations in the domestic currency, and the later as a response to the recent global financial crisis in 2008. As a case study, we provide a detailed account of the Chilean experience with these alternative tools, and provide a quantitative evaluation of the effects of some of these policies.

Keywords: Central Bank; Liquidity; monetary policies; inflation targeting; Chile (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Central bank liquidity management and “unconventional” monetary policies (2014)
Working Paper: Central Bank Liquidity Management and "Unconventional" Monetary Policies (2014)
Working Paper: Central Bank Liquidity Management and “Unconventional” Monetary Policies (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000425:012279

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