E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

• Monetary Policy Spillover to Small Open Economies: Is the Transmission Different under Low Interest Rates?

  Staff Working Paper 2021-62 Jin Cao, Valeriya Dinger, Tomás Gómez, Zuzana Gric, Martin Hodula, Alejandro Jara, Ragnar Juelsrud, Karolis Liaudinskas, Simona Malovaná, Yaz Terajima

  Does the transmission of monetary policy change when interest rates are low or negative? We shed light on this question by analyzing the international bank lending channels of monetary policy using regulatory data on banks from four small open economies: Canada, Chile, the Czech Republic and Norway.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, International topics, Monetary policy transmission JEL Code(s): E, E4, E43, E5, E52, E58, F, F3, F34, F4, F42, G, G2, G21, G28

• Optimal Monetary Policy According to HANK

  Staff Working Paper 2021-55 Sushant Acharya, Edouard Challe, Keshav Dogra

  We study optimal monetary policy in an analytically tractable Heterogeneous Agent New Keynesian model. In the model, the central bank has an incentive to reduce consumption inequality in addition to keeping economic activity at its efficient level and inflation stable.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Monetary policy JEL Code(s): E, E2, E21, E3, E30, E5, E52, E6, E62, E63

• Evaluating the Effects of Forward Guidance and Large-scale Asset Purchases

  Staff Working Paper 2021-54 Xu Zhang

  I propose a novel method to identify and estimate the macroeconomic effects of forward guidance and large-scale asset purchases (LSAP) for each FOMC announcement. I find that LSAP is more important than forward guidance in influencing output and inflation. LSAP puts upward pressure on short-term yields, so it should always be used in conjunction with forward guidance.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Econometric and statistical methods, Interest rates JEL Code(s): E, E5, G, G0