The Relevance of Open Market Operations as a Monetary Policy Tool

K-J Matheny

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: The role of open market operations - exchanges of different classes of government liabilities between the government and private sector - are considered in an oft-studied dynamic equilibrium model with money. Open market operation-financed changes in the money supply may have different consequences than lump-sum-transfer-financed money supply changes. This study confirms and extends Wallace's (1989) finding that open market operations need not be neutral even when lump-sum monetary transfers would be neutral when other model features are held constant.

Keywords: MONETARY; POLICY (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Pages: 35 pages
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:pur:prukra:1093

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