Cookies?
Library Header Image
LSE Research Online LSE Library Services

The theory of unconventional monetary policy

Farmer, Roger E.A and Zabczyk, Pawel (2016) The theory of unconventional monetary policy. CFM discussion paper series (CFM-DP2016-11). Centre For Macroeconomics, London, UK.

[img]
Preview
Text - Published Version
Download (407kB) | Preview

Abstract

This paper is about the effectiveness of qualitative easing, a form of unconventional monetary policy that changes the risk composition of the central bank balance sheet with the goal of stabilizing economic activity. We construct a general equilibrium model where agents have rational expectations and there is a complete set of financial securities, but where some agents are unable to participate in financial markets. We show that a change in the risk composition of the central bank’s balance sheet will change equilibrium asset prices and we prove that, in our model, a policy in which the central bank stabilizes non-fundamental fluctuations in the stock market is Pareto improving and self-financing.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information: © 2016 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HB Economic Theory
Date Deposited: 13 Dec 2017 10:00
Last Modified: 15 Sep 2023 23:40
URI: http://eprints.lse.ac.uk/id/eprint/86236

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics