Open market operations
By Guillaume Rocheteau, Randall Wright, Sylvia Xiaolin Xiao. Journal of Monetary Economics, 2018
116 citations recorded by the source corpus.
Abstract In an open market operation, the central bank swaps currency for bonds. We show how injecting money in this way is different from transfers, the way policy is usually formulated. The model captures liquidity explicitly by modeling the roles of assets in frictional exchange. Under various specifications for market structure and the acceptability or pledgeability of assets, we discuss implications for the Fisher and quantity equations, the possibility of negative nominal yields, liquidity traps, and market segmentation. When liquidity is endogenized using information theory, multiple equilibria emerge, with different policy predictions. Interest on reserves and quantitative easing are discussed.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/53513798c948ea8bf1f92644fd91e6c1062b46d4
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In Economics and Econometrics
- Cameron Hepburn
- N. Stern
- Dimitri Zenghelis
- Joseph E. Stiglitz
- Chris Hope
- Richard S. J. Tol
- E. Haites
- John P. Weyant
Citations in the corpus
- Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change? (2020, background): “The US Federal Reserve maintains a policy rate of 0% (Federal Reserve, 2020), while the Bank of England maintains a rate of 0.1% (Bank of England, 2020) and other central banks maintain similarly low rates.”