Fiscal implications of the Federal Reserve's balance sheet normalization

Michele Cavallo, Marco Del Negro, W Frame, Jamie Grasing, Benjamin Malin and Carlo Rosa
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Michele Cavallo: https://www.federalreserve.gov/econres/michele-cavallo.htm

No 833, Staff Reports from Federal Reserve Bank of New York

Abstract: The paper surveys the recent literature on the fiscal implications of central bank balance sheets, with a special focus on political economy issues. It then presents the results of simulations that describe the effects of different scenarios for the Federal Reserve's longer-run balance sheet on its earnings remittances to the U.S. Treasury and, more broadly, on the government's overall fiscal position. We find that reducing longer-run reserve balances from $2.3 trillion (roughly the current amount) to $1 trillion reduces the likelihood of posting a quarterly net loss in the future from 30 percent to under 5 percent. Further reducing longer-run reserve balances from $1 trillion to precrisis levels has little effect on the likelihood of net losses.

Keywords: central bank balance sheets; monetary policy; remittances (search for similar items in EconPapers)
JEL-codes: E58 E59 E69 (search for similar items in EconPapers)
Date: 2018-01-01
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Fiscal Implications of the Federal Reserve's Balance Sheet Normalization (2019)
Working Paper: Fiscal Implications of the Federal Reserve's Balance Sheet Normalization (2018)
Working Paper: Fiscal Implications of the Federal Reserve's Balance Sheet Normalization (2018)
Working Paper: Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization (2018)
Working Paper: Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization (2018)
Working Paper: Fiscal Implications of the Federal Reserve's Balance Sheet Normalization (2018)
Working Paper: Fiscal Implications of the Federal Reserve’s Balance Sheet Normalization (2018)
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