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Monetary policy, bond returns and debt dynamics

Berndt, Antje; Yeltekin, Sevin


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]

CollectionsANU Research Publications
Date published: 2015
Type: Journal article
Source: Journal of Monetary Economics
DOI: 10.1016/j.jmoneco.2015.03.001


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