Non-conventional monetary policies: QE and the DSGE literature

At the zero lower bound, the scale and scope of non-conventional monetary policies have become the key decision variables for monetary policy makers. In the UK, quantitative easing has involved the creation of a fund to purchase medium term dated government bonds with borrowed central bank reserves and so has increased the liquidity of the non-bank financial sector and temporarily eased the budget constraint of HMT. Some of these reserves have been used to increase the extent of capital held by banks and there have also been direct injections of capital into the banking system. We assess some of the issues arising from the three policies by using three separate DSGE models, which take seriously the role of financial frictions. We find that it is possible to correct the effects of a lower zero bound in DSGE models, by (i) offsetting the liquidity premium embedded in long term bonds and/or (ii) adopting countercyclical subsidies to bank capital able and/or (iii) the creation of central bank reserves that reduce the costs of loan supply. But the correct quantitative response and ongoing interaction with standard monetary policy remains an open question

Adaptations of Empire: Kipling's Kim, Novel and Game

This paper addresses the depiction of colonialism and imperial ideologies in video games through an adaptation case study of the 2016 indie role-playing game Kim, adapted from the Rudyard Kipling novel of the same name. I explore the ways in which underlying colonial and imperial ideologies are replicated and reinforced in the process of adapting novel to game. In the process of adaptation, previously obscured practices of colonial violence are brought to the forefront of the narrative, where they are materialized by the game’s procedural rhetoric. However, the game fails to interrogate or critique these practices, ultimately reinforcing the imperial ideological framework in which it was developed

Innovations in Monetary Policy

The turn of the century brought with it a period of stability, both for the global macroeconomy, but also for the consensus view of how monetary policy could and should operate within it. Policymakers and academics widely agreed that control of the short-term nominal interest rate was sufficient to achieve price stability and moderate the worst of the economic cycle. However, more recent history has shown this view of the world to be a best overly simplistic, and at worst, dangerously flawed. Short-term interest rates have become constrained by their lower bound and monetary policymakers have turned to a range of alternative, unconventional policy measures in pursuit of their objectives. This thesis looks to investigate some of the reasons why the previous paradigm failed and starts to assess the range of innovations that have come in to play as part of the fundamental reassessment of the policy framework. It does this from the point of view of theory, but also empirically, employing econometric techniques to quantify the impacts of recent large-scale asset purchase programmes by central banks. Finally, it looks to develop a detailed model which begins to address some of the limitations of the pre-crisis paradigm by including a role for money which can be created by either policymakers, or the financial sector

Reserves, Liquidity and Money: An Assessment of Balance Sheet Policies

The financial crisis and its aftermath has stimulated a vigorous debate on the use of macro-prudential instruments for both regulating the banking system and for providing additional tools for monetary policy makers. The widespread adoption of non-conventional monetary policies has provided some evidence on the efficacy of liquidity and asset purchases for offsetting the lower zero bound. Central banks have thus been reminded as to the effectiveness of extended open market operations as a supplementary tool of monetary policy. These tools are essentially fiscal instruments, as they issue central bank liabilities backed by fiscal transfers. And so having written these tools into the fiscal budget constraint, we can examine the consequences of these operations within the context of a micro-founded macroeconomic model of banking and money. We can mimic the responses of the Federal Reserve balance sheet to the crisis. Specifically, we examine the role of reserves for bond and capital swaps in stabilising the economy and also the impact of changing the composition of the central bank balance sheet. We find that such policies can significantly enhance the ability of the central bank to stabilise the economy. This is because balance sheet operations supply (remove) liquidity to a financial market that is otherwise short (long) of liquidity and hence allows other .nancial spreads to move less violently over the cycle to compensate

A Portfolio-Balance Approach to the Nominal Term Structure

Explanations of why changes in the relative quantities of safe debt seem to affect asset prices often appeal informally to a portfolio balance mechanism. I show how this type of effect can be incorporated in a general class of structural, arbitrage-free asset-pricing models using a numerical solution method that allows for a wide range of nonlinearities. I consider some applications in which the Treasury market is isolated, investors have mean-variance preferences, and the short-rate process is truncated at zero. Despite its simplicity, a version of this model incorporating inflation can fit longer-term yields well, and it suggests that fluctuations in Treasury supply explain a sizeable fraction of the historical time-series variation in term premia. Nonetheless, under plausible parameterizations central-bank asset purchases have a fairly small impact on the yield curve by removing duration from the market, and these effects are particularly weak when interest rates are close to their zero lower bound