The Macroeconomic Effects of the Federal Reserve's Conventional and Unconventional Monetary Policies

Eric Swanson

No 31603, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I separately identify and estimate the effects of the Federal Reserve’s federal funds rate, forward guidance, and large-scale asset purchase (LSAP) policies on the U.S. economy. I extend the high-frequency identification strategy of Bauer and Swanson (2023b) for monetary policy VARs by allowing each of the above policies to have possibly different economic effects. I follow Swanson (2021) and Swanson and Jayawickrema (2023) to separately identify federal funds rate, forward guidance, and LSAP components of monetary policy announcements using high-frequency interest rate changes around FOMC announcements, post- FOMC press conferences, FOMC meeting minutes releases, and speeches and testimony by the Fed Chair and Vice Chair. I find that changes in the federal funds rate have had the most powerful effects on the U.S. economy, followed by forward guidance and, lastly, LSAPs.

JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-cba and nep-mon
Note: EFG ME
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Citations: View citations in EconPapers (8)

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