Substitutability between Balance Sheet Reductions and Policy Rate Hikes: Some Illustrations and a Discussion

Edmund Crawley, Etienne Gagnon, James Hebden and James Trevino

No 2022-06-03-2, FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This note explores the substitutability between policy rate hikes and reductions in the size of the Federal Reserve's balance sheet for the removal of policy accommodation. We do so using a version of the FRB/US model augmented to incorporate the effects of changes in the Federal Reserve's asset holdings on term premiums.

Date: 2022-06-03
New Economics Papers: this item is included in nep-acc and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2022-06-03-2

DOI: 10.17016/2380-7172.3147

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