coordinated reiterations of the point had to be made before market expectations re-adjusted and market conditions calmed A final observation on forward guidance: In this section I have been treating guidance, particularly of the Odyssean variety, as an ad hoc intervention, a supplement to management of the short-term rate. Alternatively, or in addition, the central bank could adopt an overarching framework that implies systematic Odyssean responses to ZLB episodes. I'll explore this possibility below, in the section on policy frameworks Q uantitative easing Probably the most controversial form of unconventional policy adopted in recent years was what the Federal Reserve called large-scale asset purchases (LSAPs) but most of the rest of the world persisted in calling"quantitative easing,", or QE. The Federal Reserve engaged in three rounds of Qe, during which its balance sheet expanded from less than a trillion dollars to $4.5 trillion. The Bank of England, European Central Bank, Swedish Riksbank, and Bank of Japan(which had pioneered asset purchases as a form of monetary policy well before the crisis) have also undertaken quantitative easin Quantitative easing involves central bank purchases of securities in the open market, financed by the creation of bank reserves held at the central bank. By law, the Fed was able to purchase only Treasury securities and mortgage-related securities issued by government- sponsored enterprises. Other central banks, in contrast, have been able to buy a range of private securities, including corporate bonds and equities. The limits on the Fed did not seem to prevent its version of QE from being effective, although it was perhaps fortunate that, following a crisis centered on housing finance, the law did permit Fed purchases of mortgage-related securities Research suggests that QE works through two principal channels, the signaling channel and the portfolio balance channel. The signaling channel arises to the extent that asset purchases serve to demonstrate the central banks commitment to monetary easing, and in particular to keeping short-term rates lower for longer(Bauer and Rudebusch, 2013). As discussed above, the sO-called taper tantrum in 2013 demonstrated the practical relevance of the signaling channel of I also tried, without success, to name the program"credit easing, to distinguish it from the Bank of Japan's earlier foray into asset purchases(Bernanke, 2009). I argued that"credit easing focused on removing duration from bond markets, in contrast to BOJ-style quantitative easing, which had the primary goal and metric of increasing the high wered money stock9 coordinated reiterations of the point had to be made before market expectations re-adjusted and market conditions calmed. A final observation on forward guidance: In this section I have been treating guidance, particularly of the Odyssean variety, as an ad hoc intervention, a supplement to management of the short-term rate. Alternatively, or in addition, the central bank could adopt an overarching framework that implies systematic Odyssean responses to ZLB episodes. I’ll explore this possibility below, in the section on policy frameworks. Quantitative easing Probably the most controversial form of unconventional policy adopted in recent years was what the Federal Reserve called large-scale asset purchases (LSAPs) but most of the rest of the world persisted in calling “quantitative easing”, or QE.4 The Federal Reserve engaged in three rounds of QE, during which its balance sheet expanded from less than a trillion dollars to $4.5 trillion. The Bank of England, European Central Bank, Swedish Riksbank, and Bank of Japan (which had pioneered asset purchases as a form of monetary policy well before the crisis) have also undertaken quantitative easing. Quantitative easing involves central bank purchases of securities in the open market, financed by the creation of bank reserves held at the central bank. By law, the Fed was able to purchase only Treasury securities and mortgage-related securities issued by government￾sponsored enterprises. Other central banks, in contrast, have been able to buy a range of private securities, including corporate bonds and equities. The limits on the Fed did not seem to prevent its version of QE from being effective, although it was perhaps fortunate that, following a crisis centered on housing finance, the law did permit Fed purchases of mortgage-related securities. Research suggests that QE works through two principal channels, the signaling channel and the portfolio balance channel. The signaling channel arises to the extent that asset purchases serve to demonstrate the central bank’s commitment to monetary easing, and in particular to keeping short-term rates lower for longer (Bauer and Rudebusch, 2013). As discussed above, the so-called taper tantrum in 2013 demonstrated the practical relevance of the signaling channel of 4 I also tried, without success, to name the program “credit easing,” to distinguish it from the Bank of Japan’s earlier foray into asset purchases (Bernanke, 2009). I argued that “credit easing” focused on removing duration from bond markets, in contrast to BOJ-style quantitative easing, which had the primary goal and metric of increasing the high￾powered money stock