The political economy of Central Bank balance sheet management
Columbia University, New York City
Once we are back to something recognizable as sustainable macroeconomic conditions, will central bank balance sheets remain very, even spectacularly large; should the monetary authorities continue, routinely or occasionally, to intervene in a range of asset markets; if they were to do so, to what ends, aggregate-demand management or substituting for broken markets that impede the transmission of monetary policy; should they be free to set negative marginal rates but carry on paying positive rates on the bulk of their liabilities; and should they seek to steer risk premia as well as the risk-free rate of interest?
