Arbeitspapier
Central bank purchases of government bonds
We develop a microfounded model, where agents have the possibility to trade money for government bonds in an over-the-counter market. It allows us to address important open questions about the effects of central bank purchases of government bonds, these being: under what conditions these purchases can be welfare-improving, what incentive problems they mitigate, and how large these effects are. Our main finding is that this policy measure can be welfare-improving, by correcting a pecuniary externality. Concretely, the value of money is increased as central bank's purchases of government bonds induce agents to increase their demand for money, which is welfare-improving.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 193
- Classification
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Wirtschaft
Price Level; Inflation; Deflation
Money and Interest Rates: General
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Asset Pricing; Trading Volume; Bond Interest Rates
- Subject
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Monetary theory
over-the-counter markets
quantitative easing
money demand
pecuniary externality
- Event
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Geistige Schöpfung
- (who)
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Huber, Samuel
Kim, Jaehong
- Event
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Veröffentlichung
- (who)
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University of Zurich, Department of Economics
- (where)
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Zurich
- (when)
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2015
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Huber, Samuel
- Kim, Jaehong
- University of Zurich, Department of Economics
Time of origin
- 2015
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Do government purchases affect unemployment?
Do government purchases affect unemployment?
The interest rate effects of government bond purchases away from the lower bound
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