{"id":19400,"date":"2016-04-01T11:42:54","date_gmt":"2016-04-01T16:42:54","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19400"},"modified":"2016-04-01T11:42:54","modified_gmt":"2016-04-01T16:42:54","slug":"unconventional-monetary-policy-on-stilts","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19400","title":{"rendered":"Unconventional Monetary Policy on Stilts"},"content":{"rendered":"
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Unconventional Monetary Policy on Stilts<\/a><\/h3>\n<\/header>\n
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NEW YORK \u2013 With most advanced economies experiencing anemic recoveries from the 2008 financial crisis, their central banks have been forced to move from conventional monetary policy \u2013 reducing policy rates via open-market purchases of short-term government bonds \u2013 to a range of unconventional policies. Although the zero nominal bound on interest rates \u2013 previously only a theoretical possibility \u2013 had been reached and zero-interest-rate policy (ZIRP) had been implemented, growth remained anemic. So central banks embraced measures that didn\u2019t even exist in their policy toolkit a decade ago. And now they are poised to do so again.<\/p>\n

The list of unconventional measures has been extensive. There was quantitative easing (QE), or purchases of long-term government bonds, once short-term rates were already zero. This was accompanied by credit easing (CE), which took the form of central-bank purchases of private or semi-private assets \u2013 such as mortgage- and other asset-backed securities, covered bonds, corporate bonds, real-estate trust funds, and even equities via exchange-traded funds. The aim was to reduce private credit spreads (the difference between yields on private assets and those on government bonds of similar maturity) and to boost, directly and indirectly, the price of other risky assets such as equities and real estate.<\/p>\n

\"Shanghai<\/a>The Contradictions of Chinese Capitalism<\/strong><\/p>\n

Introducing\u00a0PS<\/em>\u00a0On Point.
\nMaking sense of a world of conflict and conflicting ideas.<\/p>\n<\/section>\n

Then there was \u201cforward guidance\u201d (FG), the commitment to keep policy rates at zero for longer than economic fundamentals justified, thereby further reducing shorter-term interest rates. For example, committing to maintain zero policy rates for, say, three years implies that interest rates on securities with up to a three-year maturity should also fall to zero, given that medium-term interest rates are based on expectations concerning short-term rates over the next three years. Capping things off, there was unsterilized currency-market intervention to boost exports via a weaker currency.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Unconventional Monetary Policy on Stilts NEW YORK \u2013 With most advanced economies experiencing anemic recoveries from the 2008 financial crisis, their central banks have been forced to move from conventional monetary policy \u2013 reducing policy rates via open-market purchases of short-term government bonds \u2013 to a range of unconventional policies. Although the zero nominal bound […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[13216,431,534,1917,8402,661,662,9261],"class_list":["post-19400","post","type-post","status-publish","format-standard","hentry","category-economics","tag-forward-guidance","tag-interest-rates","tag-monetary-policy","tag-nouriel-roubini","tag-project-syndicate","tag-qe","tag-quantitative-easing","tag-unconventional-monetary-policy"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19400","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19400"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19400\/revisions"}],"predecessor-version":[{"id":19401,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19400\/revisions\/19401"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19400"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19400"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19400"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}