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Open Economies Review

, Volume 25, Issue 1, pp 163–170 | Cite as

The Balance Sheet and the Future of Fed Policy

  • Stephen D. Williamson
Research Article

Abstract

The size of the Fed’s balance sheet has almost quadrupled since 2007, and the composition of the balance sheet has changed in important ways, with regard to both assets and liabilities. This short paper asseses the implications for how monetary policy works, and the entailed risks. The size of the balance sheet and its composition may not matter economically, but there are significant political risks. The political risk-taking may make monetary policy choices more difficult than they would otherwise be.

Keywords

Balance sheet Monetary policy 

JEL Classifications

E4 E5 

References

  1. Carpenter S, Ihrig J, Klee E, Quinn D, Boote A (2013) The federal reserve’s balance sheet and earnings: a primer and projections. Working paper, Board of Governors of the Federal Reserve SystemGoogle Scholar
  2. Williamson S (2012) Liquidity, monetary policy, and the financial crisis: a new monetarist approach. Am Econ Rev 102:2570–2605CrossRefGoogle Scholar
  3. Williamson S (2013) Scarce collateral, the term premium, and quantitative easing. Working paper, Washington University of St. LouisGoogle Scholar
  4. Woodford M (2012) Methods of policy accommodation at the interest-rate lower bound. Presented at the 2012 Jackson Hole Policy ConferenceGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Washington University in St. LouisSt. LouisUSA
  2. 2.Federal Reserve Bank of St. LouisSt. LouisUSA
  3. 3.Federal Reserve Bank of RichmondRichmondUSA

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