Targeting Constant Money Growth at the Zero Lower Bound

Michael Belongia and Peter Ireland

International Journal of Central Banking, 2018, vol. 14, issue 2, 159-204

Abstract: Unconventional policy actions, including quantitative easing and forward guidance, taken during and since the financial crisis and Great Recession of 2007–09, allowed the Federal Reserve to influence long-term interest rates even after the federal funds rate hit its zero lower bound. Alternatively, similar policy actions could have been directed at stabilizing the growth rate of a monetary aggregate in the face of severe disruptions to the financial sector and the economy at large. A structural vector autoregression suggests it would have been feasible for the Fed to target the growth rate of a Divisia monetary aggregate once the federal funds rate had reached its zero lower bound and that doing so would have supported a stronger, more rapid recovery.

JEL-codes: E21 E32 E37 E41 E43 E47 E51 E52 E65 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (34)

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Related works:
Working Paper: Targeting Constant Money Growth at the Zero Lower Bound (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2018:q:1:a:4

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