Benigno, Gianluca; Benigno, Pierpaolo (2022). Managing Monetary Policy Normalization (Discussion paper series).
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We propose a new framework for monetary policy analysis to study monetary policy normalization when exiting a liquidity trap. The optimal combination of reserves and interest rate policy requires an increase in liquidity (reserves) a few quarters after the policy rate is set at the effective lower bound. Removal of accommodation requires that quantitative tightening starts before the liftoff of the policy rate. Moreover, the withdrawal of liquidity takes place at a very slow pace relative to the normalization of the policy rate.
Item Type: |
Working Paper |
|---|---|
Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics |
UniBE Contributor: |
Benigno, Pierpaolo |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
ISSN: |
0265-8003 |
Series: |
Discussion paper series |
Language: |
English |
Submitter: |
Julia Alexandra Schlosser |
Date Deposited: |
25 Oct 2022 16:37 |
Last Modified: |
05 Dec 2022 16:27 |
BORIS DOI: |
10.48350/174109 |
URI: |
https://boris.unibe.ch/id/eprint/174109 |
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