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| Title: | | New instruments of monetary policy  |
| Authors: | | Chadha, Jagjit S. Holly, Sean |
| Issue Date: | | 2011 |
| Series/Report no.: | | School of Economics discussion papers 11,09 |
| Abstract: | | We assess recent developments in monetary policy practice following the financial crisis drawing on papers from a specially convened conference in March 2010. In particular, we consider why central banks throughout the world have injected substantial quantities of liquidity into the financial system and seen their balance sheets expand to multiples of GDP. We outline the rationale for balance sheet operations: (i) portfolio balance of the non-bank financial sector; (ii) an offset for the zero bound; (iii) signalling mechanism about medium term inflation expectations and (iv) the alleviation of the government's budget constraint. We briefly outline the recent experience with QE and draw a distinction between liquidity and macroeconomic stabilisation operations. |
| Subjects: | | zero bound open-market operations quantitative easing monetary policy |
| JEL: | | E31 E40 E51 |
| Document Type: | | Working Paper |
| Appears in Collections: | | School of Economics Discussion Papers, University of Kent
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