The central-bank balance sheet as an instrument of monetarypolicy

► Pure “quantitative easing” is likely to be ineffective. ► Targeted asset purchases (“credit easing”) by the central bank can be effective. ► Unconventional policies are not perfect substitutes for interest rate policy. ► “Credit easing” is more likely to improve welfare at the interest rate zero lower bound. ► Interest rate on reserves should be set close to the policy rate at all times.