Central bank balance sheet concerns and credible optimal escape from the Liquidity trap

Detalhes bibliográficos
Autor(a) principal: Mendes, Arthur Galego
Data de Publicação: 2013
Tipo de documento: Dissertação
Idioma: eng
Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
Texto Completo: https://hdl.handle.net/10438/11285
Resumo: I show that when a central bank is financially independent from the treasury and has balance sheet concerns, an increase in the size or a change in the composition of the central bank's balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular, when the short-term interest rate is up against the zero lower bound, an open market operation by the central bank that involves purchases of long-term bonds can help mitigate the deation and a large negative output gap under a discretionary equilibrium. This is because such an open market operation provides an incentive to the central bank to keep interest rates low in future in order to avoid losses in its balance sheet.
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spelling Mendes, Arthur GalegoEscolas::EPGEFGVBonomo, Marco Antônio CesarZilberman, EduardoBerriel, Tiago Couto2013-11-13T17:33:26Z2013-11-13T17:33:26Z2013MENDES, Arthur Galego. Central bank balance sheet concerns and credible optimal escape from the Liquidity trap. Dissertação (Mestrado em Economia) - FGV - Fundação Getúlio Vargas, Rio de Janeiro, 2013.https://hdl.handle.net/10438/11285I show that when a central bank is financially independent from the treasury and has balance sheet concerns, an increase in the size or a change in the composition of the central bank's balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular, when the short-term interest rate is up against the zero lower bound, an open market operation by the central bank that involves purchases of long-term bonds can help mitigate the deation and a large negative output gap under a discretionary equilibrium. This is because such an open market operation provides an incentive to the central bank to keep interest rates low in future in order to avoid losses in its balance sheet.engLiquidity trapQuantitative easingMonetary policyEconomiaPolítica monetáriaLiquidez (Economia)Quantitative easing (Política monetária)Bancos centraisCentral bank balance sheet concerns and credible optimal escape from the Liquidity trapinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/masterThesisinfo:eu-repo/semantics/openAccessreponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVORIGINALPDFPDFapplication/pdf393524https://repositorio.fgv.br/bitstreams/4007e94d-0bc6-4644-abef-f05c39bc8532/downloada6e35ab46f67c3472d55a57b0bad00abMD51LICENSElicense.txtlicense.txttext/plain; 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dc.title.eng.fl_str_mv Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
title Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
spellingShingle Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
Mendes, Arthur Galego
Liquidity trap
Quantitative easing
Monetary policy
Economia
Política monetária
Liquidez (Economia)
Quantitative easing (Política monetária)
Bancos centrais
title_short Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
title_full Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
title_fullStr Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
title_full_unstemmed Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
title_sort Central bank balance sheet concerns and credible optimal escape from the Liquidity trap
author Mendes, Arthur Galego
author_facet Mendes, Arthur Galego
author_role author
dc.contributor.unidadefgv.por.fl_str_mv Escolas::EPGE
dc.contributor.affiliation.none.fl_str_mv FGV
dc.contributor.member.none.fl_str_mv Bonomo, Marco Antônio Cesar
Zilberman, Eduardo
dc.contributor.author.fl_str_mv Mendes, Arthur Galego
dc.contributor.advisor1.fl_str_mv Berriel, Tiago Couto
contributor_str_mv Berriel, Tiago Couto
dc.subject.por.fl_str_mv Liquidity trap
Quantitative easing
Monetary policy
topic Liquidity trap
Quantitative easing
Monetary policy
Economia
Política monetária
Liquidez (Economia)
Quantitative easing (Política monetária)
Bancos centrais
dc.subject.area.por.fl_str_mv Economia
dc.subject.bibliodata.por.fl_str_mv Política monetária
Liquidez (Economia)
Quantitative easing (Política monetária)
Bancos centrais
description I show that when a central bank is financially independent from the treasury and has balance sheet concerns, an increase in the size or a change in the composition of the central bank's balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular, when the short-term interest rate is up against the zero lower bound, an open market operation by the central bank that involves purchases of long-term bonds can help mitigate the deation and a large negative output gap under a discretionary equilibrium. This is because such an open market operation provides an incentive to the central bank to keep interest rates low in future in order to avoid losses in its balance sheet.
publishDate 2013
dc.date.accessioned.fl_str_mv 2013-11-13T17:33:26Z
dc.date.available.fl_str_mv 2013-11-13T17:33:26Z
dc.date.issued.fl_str_mv 2013
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/masterThesis
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status_str publishedVersion
dc.identifier.citation.fl_str_mv MENDES, Arthur Galego. Central bank balance sheet concerns and credible optimal escape from the Liquidity trap. Dissertação (Mestrado em Economia) - FGV - Fundação Getúlio Vargas, Rio de Janeiro, 2013.
dc.identifier.uri.fl_str_mv https://hdl.handle.net/10438/11285
identifier_str_mv MENDES, Arthur Galego. Central bank balance sheet concerns and credible optimal escape from the Liquidity trap. Dissertação (Mestrado em Economia) - FGV - Fundação Getúlio Vargas, Rio de Janeiro, 2013.
url https://hdl.handle.net/10438/11285
dc.language.iso.fl_str_mv eng
language eng
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
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