Monetary policy, bond returns and debt dynamics
Using the government's intertemporal budget constraint, we quantify the contribution of returns paid on the U.S. government's debt portfolio to the evolution of the debt-to-GDP ratio. We show that announcements of unconventional monetary policy measures by the Federal Reserve between 2008.IV and 2012, as a part of macroeconomic stabilization, were associated with a sizable increase in returns and debtto-GDP ratios and contributed to fiscal imbalances. We use the Federal Reserve's portfolio...[Show more]
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|Source:||Journal of Monetary Economics|
|01_Berndt_Monetary_policy%2C_bond_returns_2015.pdf||663.42 kB||Adobe PDF||Request a copy|
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