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    Bank of Finland, Rauhankatu 19 B, Helsinki

Adam Golinski (University of York): Monetary policy at the zero lower bound: Information in the Federal Reserve's balance sheet


We examine the impact of the purchases of Treasury securities by the Federal Reserve on the Treasury bond yields. In the zero lower bound period the actual purchases of Treasury securities by the Federal Reserve are positively related to changes in the long maturity Treasury yields. This effect is driven primarily by the positive relation of the Treasury purchases with the bond risk premium, but they are also positively related with the expected inflation rate and the real rate of interest. These effects are strong and robust both in the monthly and the weekly data, and specific to the zero lower bound period. Since the Federal Reserve's purchases are also positively correlated with the cash flows to equity mutual funds and stock market returns, the evidence is consistent with the safety (and liquidity) channel hypothesis as put forward by Krishnamurthy and Vissing-Jorgensen (2011).


Research seminars organised by the Bank of Finland's research unit are held on Thursdays at 10:30–11:45 in Rauhankatu 19, 3rd floor big meeting room (unless indicated otherwise). Seminars are held in English.

Research seminars are open to all economists (unless indicated otherwise). Please register in advance at research(at)bof.fi by noon of the preceding day. Visitors will be escorted from Rauhankatu 19 B (Kirjasto/Library) entrance to the seminar room 10 minutes before the seminar.