Xiao, XDong, M2017-09-212017-09-212017-09-212017-09-21Economic Working Paper Series. Retrieved from http://www.aut.ac.nz/__data/assets/pdf_file/0008/754514/Economics-WP-2017-07.pdfhttps://hdl.handle.net/10292/10819We discover a consumption channel of monetary policy in a model with money and government bonds. When the central bank withdraws government bonds (short-term or long-term) through open market operations, it lowers returns on bonds. The lower return has a direct negative impact on consumption by households that hold bonds, and an indirect negative impact on consumption by households that hold money. As a result, Örms earn less proÖts from production, which leads to higher unemployment. The existence of such a consumption channel can help us understand the e§ects of unconventional monetary policy.Auckland University of Technology (AUT) encourages public access to AUT information and supports the legal use of copyright material in accordance with the Copyright Act 1994 (the Act) and the Privacy Act 1993. Unless otherwise stated, copyright material contained on this site may be in the intellectual property of AUT, a member of staff or third parties. Any commercial exploitation of this material is expressly prohibited without the written permission of the owner.Interest rate; Monetary policy; Consumption; unemploymentOpenAccess