Alvarez, Fernando; Atkeson, Andrew; Kehoe, Patrick J. - Federal Reserve Bank of Minneapolis - 1999
This paper analyses the effects of open market operations on interest rates in a model in which agents must pay a fixed … increase nominal interest rates, flatten the yield curve, and lead to a downward-sloping yield curve on average. In contrast …, if markets are sufficiently segmented, then persistent money injections decrease interest rates, steepen or even twist …