Managing Monetary Policy Normalization
Copyright policy )Managing Monetary Policy Normalization
We propose a new framework for monetary policy analysis to study monetary policy normalization when exiting a liquidity trap. The optimal combination of reserves and interest rate policy requires an increase in liquidity (reserves) a few quarters after the policy rate is set at the effective lower bound. Removal of accommodation requires that quantitative tightening starts before the liftoff of the policy rate. Moreover, the withdrawal of liquidity takes place at a very slow pace relative to the normalization of the policy rate.
- London School of Economics and Political Science United Kingdom
- University of Bern Switzerland
- Einaudi Institute for Economics and Finance Italy
- Federal Reserve Bank of New York United States
ddc:330, quantitative easing, quantitative tightening, reserve management, central bank balance sheet, E58, interest on reserves, E52, E31, E43
ddc:330, quantitative easing, quantitative tightening, reserve management, central bank balance sheet, E58, interest on reserves, E52, E31, E43
selected citations These citations are derived from selected sources.This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).3 popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.Top 10% influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).Average impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.Average
Citations provided by BIP!Popularity provided by BIP!