Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241092 
Year of Publication: 
2020
Series/Report no.: 
Bank of Canada Staff Discussion Paper No. 2020-16
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper summarizes the literature on the performance of various extended monetary policy tools when conventional policy rates are constrained by the effective lower bound. We highlight issues that may arise when these tools are used by central banks of small open economies. Tools that have already been used by various central banks include forward guidance and balance sheet policies-such as quantitative easing, yield curve targeting, credit easing, funding-for-lending and purchases of other assets. The paper also touches on the use of negative interest rates. The evidence to date suggests that such tools have allowed central banks to ease financial conditions and thereby stimulate aggregate demand. The article also considers overt monetary financing (often referred to as "helicopter money") as an additional tool if conditions require even more aggressive easing. We review the sequencing and pacing of the use of such tools, as well as spillover effects and financial stability concerns, as important aspects of implementation strategies.
Subjects: 
Monetary policy
Monetary policy implementation
Monetary policy transmission
JEL: 
E52
E58
E63
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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