Central bank balance sheet policies are among the most popular stabilization policy tools but are still poorly understood theoretically and empirically. A new study by Bocconi University, Milan, professors Luigi Iovino and Dmitriy Sergeyev published in The Review of Economic Studies shows that such balance sheet policies are effective if investors behave according to a plausible alternative behavioral assumption to the demanding requirement of rational expectations.
Click here for original story, A recent research on the effects of central bank balance sheet policies
Source: Phys.org