Fed paper: corporate bond buying can misallocate capital

Federal Reserve
The Fed eagle

Corporate bond purchase schemes may lead to unintended misallocation of capital, undermining their effectiveness, according to a working paper published by the Federal Reserve in August.

Authors Robert Kurtzman and David Zeke tackle the question of whether all asset purchase programmes are created equal, using a dynamic stochastic general equilibrium model where the central bank buys highly rated corporate debt. This causes spreads to fall more for some firms than others, affecting the

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: