- External MPC Unit Discussion Paper No.41: The relevance or otherwise of the central bank's balance sheet（Bank of England）
We find that across a fairly wide set of environments ― with different rules for the setting of interest rates and different ways in which fiscal policy is conducted ― the impact of asset purchases working through a portfolio re-balancing channel is weak or absent. Because our periods are long, one could interpret this result as showing that the central bank swapping shorter-dated bonds for longer-dated bonds is relatively ineffective, at least when financial markets are operating normally.
… the main way in which such balance sheet changes have worked is probably not through the operation of a portfolio rebalancing of private sector portfolios undertaken in an environment of normally functioning financial markets. But large-scale asset purchases undertaken in an environment when financial markets are not working normally may well have significant effects.