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The Balance Sheet and the Future of Fed Policy

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  • Stephen Williamson

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. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Stephen Williamson, 2014. "The Balance Sheet and the Future of Fed Policy," Open Economies Review, Springer, vol. 25(1), pages 163-170, February.
    • Handle: RePEc:kap:openec:v:25:y:2014:i:1:p:163-170
    DOI: 10.1007/s11079-013-9302-8
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    References listed on IDEAS

    as
    1. Stephen D. Williamson, 2012. "Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach," American Economic Review, American Economic Association, vol. 102(6), pages 2570-2605, October.
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    Cited by:

    1. Julien Pinter, 2018. "Does Central Bank Financial Strength Really Matter for Inflation? The Key Role of the Fiscal Support," Open Economies Review, Springer, vol. 29(5), pages 911-952, November.

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    More about this item

    Keywords

    Balance sheet; Monetary policy; E4; E5;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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