The IS-LM-BB: A Model For Unconventional Monetary Policy

Authors

  • Waldo Mendoza Bellido [1] Professor and researcher at the Economics Department, PUCP. The author is grateful for the invaluable comments of Oscar Dancourt, Brazil
Vol. 4 No. 11 (2016)
Articles
November 5, 2016

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The Monetary policy of the United States has not been the same since the 2008-2009 international crisis. Following the crisis, given that the federal funds interest rate - the conventional monetary policy instrument - fell to almost zero, the Federal Reserve (FED) had to resort to two unconventional instruments: Firstly, an announcement on the future trajectory of the short-term interest rate. Secondly, direct intervention in the long-term bond market.