Substitutability between Balance Sheet Reductions and Policy Rate Hikes: Some Illustrations and a Discussion

202232 citationsJournal Articlehybrid Open Access

Authors

Etienne Gagnon · Federal Reserve Board of Governors

James Hebden · Federal Reserve Board of Governors

James Trevino · Federal Reserve Board of Governors

Abstract

This note explores the substitutability between policy rate hikes and reductions in the size of the Federal Reserve's balance sheet for the removal of policy accommodation. We do so using a version of the FRB/US model augmented to incorporate the effects of changes in the Federal Reserve's asset holdings on term premiums.

Topics & Keywords

Monetary Policy and Economic Impact Fiscal Policies and Political Economy Global Financial Crisis and Policies

Publication Details

Published in: FEDS Notes

DOI: 10.17016/2380-7172.3147

Field-Weighted Citation Impact: 11.98

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Substitutability between Balance Sheet Reductions and Policy Rate Hikes: Some Illustrations and a Discussion

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Abstract

Topics & Keywords

Publication Details