The Monetary Policy Response to COVID-19

Econ Buff Podcast #13 with Ryan Mattson

https://www.youtube.com/watch?v=J76B4cs7Zs0

Dr. Ryan Mattson talks with me about the monetary policy response to the novel coronavirus. We discuss what the goals of the Federal Reserve enacting monetary stimulus for the pandemic is. Dr. Mattson gives his view on the transmission mechanism and how it might work given the way banks have held excess reserves since 2008. We talk about why the FED started paying interest on excess reserves in 2008 and how that becomes a monetary policy tool today. We consider what it would mean for the FED to target levels and if that would be a more powerful action for the FED to take. Dr. Mattson lays out what other steps the FED is taking and might take to stimulate the economy once the public health crisis passes. We explore how much more quantitative easing the FED could undertake and how Dr. Mattson views this recession as being different than the 2008 crisis.