The reason the Fed wants a smaller balance sheet is political.The size andcomposition of its balance sheet accentuate and increase the visibility of the quasifiscalrole it plays and represent a threat to its operational independence.We arguethat there is no major monetary policy management and/or monetary policyeffectiveness argument for shrinking the balance sheet of the Fed.
20170810-CITIGROUP-GLOBAL_ECONOMICS_VIEW:WHY_DOES_THE_FED_(OR_ANY_CENTRAL_BANK.pdf
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