Unconventional government debt purchases as a supplement to conventional monetary policy

Details

Serval ID
serval:BIB_0C15D581639D
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Unconventional government debt purchases as a supplement to conventional monetary policy
Journal
Journal of Economic Dynamics and Control
Author(s)
Ellison M., Tischbirek A.
ISSN
0165-1889
Publication state
Published
Issued date
06/2014
Peer-reviewed
Oui
Volume
43
Pages
199 - 217
Language
english
Abstract
In response to the Great Financial Crisis, the Federal Reserve, the Bank of England and many other central banks have adopted unconventional monetary policy instruments. We investigate if one of these, purchases of long-term government debt, could be a valuable addition to conventional short-term interest rate policy even if the main policy rate is not constrained by the zero lower bound. To do so, we add a stylised financial sector and central bank asset purchases to an otherwise standard New Keynesian DSGE model. Asset quantities matter for interest rates through a preferred habitat channel. If conventional and unconventional monetary policy instruments are coordinated appropriately then the central bank is better able to stabilise both output and inflation.
Keywords
Quantitative easing, Large-scale asset purchases, Preferred habitat, Optimal monetary policy
Web of science
Create date
14/08/2015 11:59
Last modification date
20/08/2019 12:33
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