The Fed's Exit Strategy

The Fed's Exit Strategy

Category:

Education

Tags:

• Economics
• Federal Reserve
• economy
• crisis
• economic
• educational
• lecture

[econometro]

thank you, professor Thoma. Your lessons are very interesting. I just did not understand the last conclusions of your explation. Maybe the camera stopped working for a while. When it restarted working you have made another graph.

[vik238]

You are an excellent instructor, Dr. Thoma. Greetings from a UBC Economics alumnus.

[MikeAbrahams]

The first addition I would make to this model is that the demand for reserves increases over time as the economy grows and the balance sheets of banks expand. This upward drift means that the Fed is not able to tell exactly when interest rates will start to move as it decreases its balance sheet. The difficulty in estimating this curve helps explain why the Fed needs to be cautious and why its new capability to pay IOER is important.

[lextalionis2001]

thank you for posting professor thoma

[KarlBonner1982]

Two questions: first of all, how much stimulatory effect have QE1 and QE2 likely had on the general economy, and why? Secondly, what are the risks of the Fed trying to clear all those excess reserve assets too quickly (how might the flooding of assets into the markets cause disruptions, and what would those disruptions look like)?

Other than that an excellent and highly informative review of the FF markets in liquidity trap mode!