A Model of Monetary Policy Shocks for Financial Crises and Normal Conditions

John W. Keating, Logan Kelly, A. Lee Smith and Victor (Vic) Valcarcel

Journal of Money, Credit and Banking, 2019, vol. 51, issue 1, 227-259

Abstract: Deteriorating economic conditions in late 2008 led the Federal Reserve to lower the target federal funds rate to near zero, inject liquidity through novel facilities, and engage in large‐scale asset purchases. The combination of conventional and unconventional policy measures prevents using the effective federal funds rate to assess the effects of monetary policy beyond 2008. We employ a broad monetary aggregate to elicit the effects of monetary policy shocks both before and after 2008. Our estimates align well with major changes in the Fed's asset purchase programs and yield responses that are free from price, output, and liquidity puzzles that plague other approaches.

Date: 2019
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Citations: View citations in EconPapers (22)

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https://doi.org/10.1111/jmcb.12522

Related works:
Working Paper: A model of monetary policy shocks for financial crises and normal conditions (2014)
Working Paper: A Model of Monetary Policy Shocks for Financial Crises and Normal Conditions (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:51:y:2019:i:1:p:227-259

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