Lower bound not a big constraint for the Fed – paper

US Fed

The Federal Reserve is not particularly constrained by the effective lower bound on interest rates, according to a new working paper published by the National Bureau of Economic Research.

Author Eric Swanson surveys recent literature on the ELB, searching for clues as to how effective Fed policy is when short-term interest rates cannot be cut any further.

Swanson finds several studies highlighting the effectiveness of additional tools the Fed may use at the ELB, with forward guidance and

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