The gradual unwinding of the Federal Reserve’s balance sheet from 2017 to 2019 tightened financial conditions, though this tightening did not simply manifest as a reversal of the effects of the original balance sheet expansion.
Local Projections, Autocorrelation, and Efficiency
By Amaze Lusompa
RWP 21-01, March 2021
A more accurate estimator of causal effects may help economists better evaluate how monetary policy affects the economy.