Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/120796
Authors: 
Del Negro, Marco
Sims, Christopher A.
Year of Publication: 
2014
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 701
Abstract: 
Using a simple general equilibrium model, we argue that it would be appropriate for a central bank with a large balance sheet composed of long-duration nominal assets to have access to, and be willing to ask for, support for its balance sheet by the fiscal authority. Otherwise its ability to control inflation may be at risk. This need for balance sheet support - a within-government transaction - is distinct from the need for fiscal backing of inflation policy that arises even in models where the central bank's balance sheet is merged with that of the rest of the government.
Subjects: 
central bank's balance sheet
solvency
monetary policy
JEL: 
E58
E59
Document Type: 
Working Paper

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