Blogging has been weak. The reason has been this study which I was trying to do.
I have tried to compare RBI balance sheet with balance sheet of some select central banks. The comparison is pre-crisis and post-crisis.
Central banks have been one of the main fire-fighters since the crisis broke out in 2008. After cutting policy rates to near zero levels, they have expanded their balance-sheets to ease crisis pressures. These policies have been called unconventional policies. These measures have led to huge criticism from both economists and policymakers. There is active research on whether these measures have been helpful or not. So far, the house is pretty divided on whether unconventional policies have been successful.
In this vein, the above analysis is an attempt to compare balance sheets of select central banks. Central banks have used Balance sheets as part of their unconventional policy tools. We analysed balance sheets of selected central banks of both advanced and emerging economies. The idea was to understand the changes in the balance sheets overtime and also understand differences between central bank responses in the crisis.
There are always challenges while concluding such analyses as each central bank conducts monetary policy using different tools. Given this limitation, we have tried to both simplify and elaborate on the key differences between the select central banks. In developed economies, both the size and composition of the balance sheet has changed post-crisis. The balance sheets have expanded and asset composition has shifted increasingly to domestic assets. Whereas in emerging economies, we see there are changes in composition with shift to domestic assets but the overall growth is similar to pre-crisis levels.
Overall, emerging economies were less affected compared to developed economies the 2008 crisis. This is also reflected in the balance-sheets of these selected central banks.
Read the paper for further details. Comments/Suggestions are welcome..
