ON THE MACROECONOMIC AND WEALTH EFFECTS OF UNCONVENTIONAL MONETARY POLICY

2016 ◽  
Vol 21 (5) ◽  
pp. 1189-1204 ◽  
Author(s):  
Fredj Jawadi ◽  
Ricardo M. Sousa ◽  
Raffaella Traverso
Keyword(s):  
Growth Rate ◽  
Monetary Policy ◽  
Central Bank ◽  
Stock Prices ◽  
Asset Prices ◽  
Housing Prices ◽  
Wealth Effects ◽  
Unconventional Monetary Policy ◽  
Substantial Impact ◽  
Bank Reserves

This paper focuses on the macroeconomic and wealth effects of unconventional monetary policy. To this end, we estimate a Bayesian structural vector autoregression (B-SVAR) using U.S. monthly data for the post-Lehman Brothers' collapse period. We show that a positive shock to the growth rate of central bank reserves does not have a substantial impact on industrial production or consumer prices. However, it also gives a strong boost to asset prices, which is larger in magnitude for stock prices than for housing prices. Thus, unconventional monetary policy typically operates via portfolio-rebalancing effects. A VAR counterfactual exercise confirms the role of the shocks to the growth rate of central bank reserves in explaining the dynamics of the variables included in the system, especially in the case of asset prices. Finally, additional empirical assessments uncover an important change in the conduct of monetary policy from “standard” to “exceptional” times and the suitability of our model to capture such a structural transformation.

scholarly journals A SUNSPOT-BASED THEORY OF UNCONVENTIONAL MONETARY POLICY

2020 ◽  
pp. 1-32
Author(s):  
Roger E. A. Farmer ◽  
Pawel Zabczyk
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Markets ◽  
Rational Expectations ◽  
Balance Sheet ◽  
Unconventional Monetary Policy ◽  
Efficient Outcome ◽  
Complete Set ◽  
Pareto Efficient ◽  
Financial Securities

This paper is about the effectiveness of qualitative easing, a form of unconventional monetary policy that changes the risk composition of the central bank balance sheet. We construct a general equilibrium model where agents have rational expectations, and there is a complete set of financial securities, but where some agents are unable to participate in financial markets. We show that a change in the risk composition of the central bank’s balance sheet affects equilibrium asset prices and economic activity. We prove that, in our model, a policy in which the central bank stabilizes non-fundamental fluctuations in the stock market is self-financing and leads to a Pareto efficient outcome.

Europäische Zentralbank: kontraproduktive unkonventionelle Geldpolitik und der Euro-Wechselkurs / European Central Bank: counter-productive unconventional monetary policy and the exchange rate

ORDO ◽  
2014 ◽  
Vol 65 (1) ◽  
Author(s):  
Ansgar Belke
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
European Central Bank ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
European Central ◽  
The Exchange Rate ◽  
Europäische Zentralbank

ZusammenfassungDie EZB sollte der Versuchung widerstehen, die Deflationsgefahr in der Eurozone durch zusätzliche Varianten unkonventioneller Geldpolitik (z.B. „Quantitative Easing“) zu bekämpfen. Was in den USA oder in Großbritannien geklappt haben mag, wird in der Eurozone nicht funktionieren. Es besteht gar die Gefahr einer Deflationsspirale, wie dieser Beitrag zeigt. Eingebettet werden die Argumente in die aktuelle Debatte um den „zu starken“ Euro.

scholarly journals Unconventional monetary policy of the European Central Bank: A brief recapitulation

2019 ◽  
Vol 53 (3) ◽  
pp. 43
Author(s):  
Ilona Skibińska-Fabrowska
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Economic Crisis ◽  
Financial Market ◽  
European Central Bank ◽  
Central Banks ◽  
Unconventional Monetary Policy ◽  
European Central ◽  
National Bank

<p>The financial and economic crisis that has hit many economies in recent years has significantly increased the activity of central banks. After using the standard instruments of conducting monetary policy, in view of the obstruction of monetary impulse transmission channels, they reached for non-standard instruments. Among them, asset purchase programs played a signifciant role. The European Central Bank (ECB) launched the largest asset purchase programme (APP) of this type in 2014 and expired in December 2018. The aim of the undertaken activities was to improve the situation on the financial market and stimulate economic growth. The article reviews the literature and results of research on the effects of the program and indicates the possibility of using the ECB’s experience in conducting monetary policy by the National Bank of Poland.</p>

scholarly journals Demand for Central Bank Reserves and Monetary Policy Implementation Frameworks: The Case of the Eurosystem

2021 ◽  
Author(s):  
Pontus &Aring;berg ◽  
Marco Corsi ◽  
Vincent Grossmann-Wirth ◽  
Tom Hudepohl ◽  
Yvo Mudde ◽  
...  
Keyword(s):  
Monetary Policy ◽  
Policy Implementation ◽  
Central Bank ◽  
Bank Reserves

Sustainability of the Bank of Japan’s ETF Purchasing Policy

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Kimie Harada
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Central Bank ◽  
Listed Companies ◽  
Unconventional Monetary Policy ◽  
Exit Strategy ◽  
Market Mechanisms ◽  
Bank Of Japan ◽  
Policy Measures ◽  
Purchasing Policy

Abstract The Bank of Japan is the only central bank that holds enormous amounts of stocks of listed companies by purchasing ETFs via its unconventional monetary policy measures. The Bank of Japan has been buying ETFs for more than a decade and, seemingly, has no awareness that it has become a huge investor in the stock market. This article explains how this policy has potentially distorted market mechanisms and how it is difficult to find an exit strategy.

Adjudicating Economics? Central Bank Independence and the Appropriate Standard of Judicial Review

2014 ◽  
Vol 15 (2) ◽  
pp. 265-280 ◽  
Author(s):  
Matthias Goldmann
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Judicial Review ◽  
Constitutional Court ◽  
Unconventional Monetary Policy ◽  
The European Union ◽  
Policy Measure ◽  
European Central ◽  
Basic Law ◽  
Federal Constitutional

In Karlsruhe's recent request for a preliminary ruling, an unconventional monetary policy measure of the European Central Bank (ECB) finds an unconventional judicial response. Based on its mandate to enforce the fundamental right to vote, the Federal Constitutional Court (FCC) leaves no doubt about its view that the ECB's Outright Monetary Transactions Programme (OMT Programme) violates the law of the European Union and hence the German Basic Law, unless one reads them in a rather restrictive way. But as unconventional monetary policy steps up the need for the ECB to justify the legality of its measures, so does the FCC's unconventional expansion of the scope of judicial review raise questions which the recent decision in its—generally laudable—brevity leaves underexplored. In particular, the decision does not dwell much on the issue whether it is appropriate for a court to review issues of monetary policy, and which standard of review should apply. Only Judge Gerhardt calls the majority's standard of review into question when he doubts whether the requirement for transgressions of the European Union's competences to be “manifest” is a workable criterion for defining the scope of the FCC's ultra vires control.

scholarly journals Complexity, Uncertainty, and Monetary Policy: Can the ECB Avoid the Unconventional Becoming the ‘New Normal’?

2019 ◽  
Vol 16 (1) ◽  
Author(s):  
Christopher A. Hartwell
Keyword(s):  
Monetary Policy ◽  
Structural Change ◽  
Central Bank ◽  
Euro Area ◽  
European Central Bank ◽  
Unresolved Issue ◽  
Unconventional Monetary Policy ◽  
New Normal ◽  
European Central

Abstract Worries about Italy and the unresolved issue of euro governance – coupled with uncertainty surrounding Brexit – means that the European Central Bank (ECB) may already be facing its next crisis in the euro area. Unfortunately, the ECB is still fighting the last war, deploying the tools of unconventional monetary policy to address lingering problems while unable institutionally to address needed structural change. This paper looks at the ECB as an institution amongst institutions and shows how even more unconventional approaches will not help to bolster the economy of the euro area. Indeed, given the complexity of money, the effects of expectations, and continued uncertainty, expanding the ECB’s unconventional arsenal is likely to have deleterious consequences across Europe.

scholarly journals The Impact of Unconventional Monetary Policy on Gendered Wealth Inequality

2019 ◽  
Vol 31 (2) ◽  
pp. 175-186 ◽  
Author(s):  
Brigitte Young
Keyword(s):  
Monetary Policy ◽  
Asset Prices ◽  
Household Finance ◽  
Wealth Inequality ◽  
Unconventional Monetary Policy ◽  
Distributional Effects ◽  
Monetary Policies ◽  
The Rich ◽  
The Impact ◽  
Central Bankers

Unconventional monetary policy was implemented as a result of the financial crisis and resulted in rising asset prices in the stock markets. While the increase in asset prices is not exclusively triggered by unconventional monetary policy, central bankers accept that unconventional monetary policy has resulted in distributional effects on wealth, and that these are not negligible. What is missing are studies analyzing whether these non-standard monetary policies have different distributional effects on women and men. The intent of the paper is to interrogate whether unconventional monetary policy of central banks has a gender bias that operates in favor of men as gender and against women as gender. Relying on insights from feminist economics, the paper uses the results of the ECB Household Finance and Consumption Survey (HFCS) of 62,000 household across 15 euro-area countries. While the results are tentative, they show an asymmetric distributional gendered impact. Since the rich own more assets than the poor, and since monetary easing works in part by raising asset prices, these unconventional policies may unintentionally benefit the wealthier quintile (on average more male) at the expense of the poorer strata of society (on average more female).

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