Unconventional Monetary Policy at the Lower Zero Bound

We have the seventh year after the onset of the financial crisis and are still suffering its impacts. To support financing conditions and economic recovery in general many conventional and unconventional monetary policy measures have been taken. The Federal Reserve Bank in the United States has become known for using them extensively. On the one hand they lowered their operational interest rate to the lower zero bound in December 2008 where it is still stuck and on the other hand they established diverse lending facilites and purchased assets in large scale. Although costs for support have been enormous economic recovery has been varyingly strong. While some macroeconomic aggregates have exceeded levels and growth before the crisis others are recovering more slowly. Yet all aggregates are improving at least since early 2010. Nonetheless extensive policy accommodation is still in place. While tapering of asset purchases since January 2014 is a first step normalcy is long in coming. As raising interest rates and reducing (longer-term) assets and excess reserves on Fed’s balance sheet will be inevitable question remains about measures and timing of the exit....