Unconventional monetary policy, liquidity trap, and asset prices

2016 ◽  
Vol 39 (3) ◽  
pp. 411-436
Author(s):  
Felipe Rezende
Keyword(s):  
Monetary Policy ◽  
Asset Prices ◽  
Unconventional Monetary Policy ◽  
Liquidity Trap

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).

Unconventional monetary policy and negative interest rates: a Post-Keynesian perspective on the liquidity trap and euthanasia of the rentier

2019 ◽  
Vol 7 (2) ◽  
pp. 185-200
Author(s):  
Olivia Bullio Mattos ◽  
Felipe Da Roz ◽  
Fernanda Oliveira Ultremare ◽  
Guilherme Santos Mello
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Full Employment ◽  
Capital Gains ◽  
Unconventional Monetary Policy ◽  
Short Term ◽  
Main Hypothesis ◽  
Liquidity Trap ◽  
Negative Interest Rates

This article discusses ‘unconventional’ monetary policy after the 2008 crisis. The focus is the original theoretical basis for such policy and possible Keynesian readings and criticisms. Drawing inspiration mainly from Keynes (1930; 1936) and Minsky (1975), the paper seeks to explain why ultra-low/negative interest rates neither caused ‘rentiers’ to die, nor achieved full employment. The main hypothesis goes in the direction pointed to by Keynes: the problem is the low marginal efficiency of capital, the liquidity trap, and the lack of active government fiscal policy, which should be used in conjunction with monetary policy that maintains low long-term interest rates in order to spur investment. Monetary policy and very low/negative interest rates seem insufficient to overcome low growth. They are also incapable, at least in the short term, of promoting euthanasia of the rentiers as current monetary policy allows financial institutions to benefit from the capital gains it spurs.

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.

Monetary policy effectiveness in the liquidity trap: a switching regimes approach

2021 ◽  
Vol 9 (1) ◽  
pp. 139-155
Author(s):  
Dimitris G. Kirikos ◽  
Keyword(s):  
Monetary Policy ◽  
Global Financial Crisis ◽  
Regime Shifts ◽  
Money Growth ◽  
Unconventional Monetary Policy ◽  
Liquidity Trap ◽  
Investment Expenditure ◽  
Switching Regimes ◽  
Expenditure Growth ◽  
The Usa

Liquidity trap economics seems to have fared particularly well on all counts of its predictions, in the aftermath of the 2008 global financial crisis. Therefore, in this paper we evaluate formally the effectiveness of unconventional monetary policy in a liquidity trap, based on data from Japan, the USA, and the eurozone over periods of liquidity trap conditions (1994–2018 for Japan and 2009–2018 for the USA and the eurozone). Under effective unconventional policies, changes in the base money-growth regime should be associated with similar regime changes in either inflation or investment expenditure growth and the estimation of a switching regimes model allows us to test whether significant joint regime shifts occur in the data. Also, a test of liquidity trap conditions is based on a discrepancy of regime shifts between growth rates of base money and broad money, since this implies a collapse of the money multiplier. Our findings show that drastic shifts in the growth rate of the monetary base do not produce similar behavior for the inflation rate, investment expenditure growth, and broad money growth, thus pointing to liquidity trap conditions and unconventional monetary policy ineffectiveness.

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