The Federal Reserve Is Not Very Constrained by the Lower Bound on Nominal Interest Rates / Eric T. Swanson.

Format:

Book

Author/Creator:

Swanson, Eric T.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25123.

NBER working paper series no. w25123

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

I survey the literature on monetary policy at the zero lower bound (ZLB) and effective lower bound (ELB) to make three main points: First, the Federal Reserve's forward guidance and large-scale asset purchases are effective monetary policy tools at the Z/ELB. Second, during the 2008-15 U.S. ZLB period, the Fed was not very constrained in its ability to influence medium- and longer-term interest rates and the economy. Third, the risks of the Fed being significantly constrained by the ELB in the future are typically greatly overstated. I conclude that the Federal Reserve is not very constrained by the lower bound on nominal interest rates.

Notes:

Print version record

October 2018.