The Non-Standard Monetary Policy Measures of the ECB: Motivations, Effectiveness and Risks

2018 ◽  
Vol 51 (4) ◽  
pp. 513-560
Author(s):  
Stefano Neri ◽  
Stefano Siviero
Keyword(s):  
Monetary Policy ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Jel Classification ◽  
Policy Transmission ◽  
Policy Measures ◽  
Low Levels ◽  
Monetary Policy Transmission Mechanism ◽  
The Many ◽  
The Global Financial Crisis

Abstract This paper examines the challenges faced by the European Central Bank since the outbreak of the global financial crisis. From 2008 to 2014, the need to preserve the correct functioning of the monetary policy transmission mechanism and ensure the supply of credit to the private sector stretched the limits of conventional monetary policy. In 2015, the risk of deflation led the ECB to start a large scale asset purchase programme. The analysis is largely based on a review of the many studies that Banca d’Italia staff has produced on the factors that have brought inflation to unprecedented low levels in 2014 and on the effects of the asset purchase programme. Zusammenfassung Dieser Beitrag untersucht die Herausforderungen, vor denen die Europäische Zentralbank seit dem Ausbruch der globalen Finanzkrise steht. Von 2008 bis 2014 hat die Notwendigkeit, das ordnungsgemäße Funktionieren des geldpolitischen Transmissionsmechanismus zu wahren und die Kreditversorgung des privaten Sektors sicherzustellen, die Grenzen der konventionellen Geldpolitik überschritten. Im Jahr 2015 führte das Deflationsrisiko dazu, dass die EZB ein groß angelegtes Anleihenkaufprogramm aufnahm. Die vorliegende Analyse basiert im Wesentlichen auf einer Überprüfung der zahlreichen Studien, welche die Mitarbeiter der Banca d‘Italia zu den Faktoren erstellt haben. Diese Faktoren haben einerseits die Inflation 2014 auf ein beispiellos niedriges Niveau gebracht und andererseits Auswirkungen auf das Programm zum Ankauf von Vermögenswerten zur Folge gehabt. JEL Classification: E31, E43, E52

scholarly journals Confidence in future monetary policy as a way to overcome the liquidity trap

2019 ◽  
Vol 5 (2) ◽  
pp. 117-135
Author(s):  
Olga Kuznetsova ◽  
Sergey Merzlyakov ◽  
Sergey Pekarski
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Time Consistency ◽  
Central Banks ◽  
Time Inconsistency ◽  
Liquidity Trap ◽  
Developed Economies ◽  
The Global Financial Crisis

The global financial crisis of 2007–2009 has changed the landscape for monetary policy. Many central banks in developed economies had to employ various unconventional policy tools to overcome a liquidity trap. These included large-scale asset purchase programs, forward guidance and negative interest rate policies. While recently, some central banks were able to return to conventional monetary policy, for many countries the effectiveness of unconventional policies remains an issue. In this paper we assess diverse practices of unconventional monetary policy with a particular focus on expectations and time consistency. The principal aspect of successful policy in terms of overcoming a liquidity trap is the confidence that interest rates will remain low for a prolonged period. However, forming such expectations faces the problem of time inconsistency of optimal policy. We discuss some directions to solve this problem.

ARE MAJOR CENTRAL BANKS BLINDED BY THE ANALYTICAL ELEGANCE OF THEIR MODELS? POSSIBLE COSTS OF UNCONVENTIONAL MONETARY POLICY MEASURES

2017 ◽  
Vol 62 (01) ◽  
pp. 87-108 ◽  
Author(s):  
PIOTR CIŻKOWICZ ◽  
ANDRZEJ RZOŃCAZ
Keyword(s):  
Monetary Policy ◽  
Global Financial Crisis ◽  
Significant Risk ◽  
Central Banks ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Unconventional Monetary Policy ◽  
Keynesian Model ◽  
Policy Measures ◽  
The Global Financial Crisis

We survey the possible costs of the unconventional monetary policy measures undertaken by major central banks after the outbreak of the global financial crisis in 2008. We argue that these costs are not easily discernable in the new Keynesian (NK) model, which defines a theoretical framework for monetary policy. First, the costs may result from the effects of unconventional monetary policy measures on the intensity of restructuring and the persistence of uncertainty (which increased after the outbreak of the crisis). However, neither of these processes is considered in the new Keynesian model. Second, costs may be generated not only by distortions in the choices made by economic agents but may also be a result of the decisions made by governments, particularly in terms of the fiscal deficit level. However, the new Keynesian model does not consider the effects of unconventional monetary policy measures on the quality of fiscal policy. Without carefully considering the costs, there is a significant risk that unconventional monetary policy measures could become a conventional response to recurrent crises.

scholarly journals Two Major Economic Crises in the Early Twenty-First Century and their Impact on Central Bank Independence

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Marek Dabrowski
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Large Scale ◽  
Global Financial Crisis ◽  
First Century ◽  
Economic Crises ◽  
Government Bonds ◽  
Early Twenty ◽  
Twenty First Century ◽  
The Global Financial Crisis

Abstract Two major economic crises in the early twenty-first century have had a serious impact on monetary policy and CB independence. Disruption in financial intermediation and associated deflationary pressures caused by the global financial crisis of 2007–2009 and European financial crisis of 2010–2015 pushed central banks (CBs) in major currency areas towards adoption of unconventional monetary policy measures, including large-scale purchase of government bonds (quantitative easing). The same approach has been taken by CBs in response to the COVID-19 crisis in 2020 even if the characteristics of this crisis differ from the previous one. As a result of both crises, CBs have become major holders of government bonds and de facto – main creditors of governments. Against rapidly deteriorating fiscal balances, CBs have become hostages of fiscal policies, which compromises their independence. Risks to the CB independence also come from their additional mandates (beyond price stability) and populist political pressures.

scholarly journals Creditor rights, monetary policy, financial crisis, and trade credit

2021 ◽  
pp. 234094442098829
Author(s):  
María Cantero-Saiz ◽  
Begoña Torre-Olmo ◽  
Sergio Sanfilippo-Azofra
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Trade Credit ◽  
Global Financial Crisis ◽  
Jel Classification ◽  
Creditor Protection ◽  
Credit Channel ◽  
Creditor Rights ◽  
Financial Crisis Of 2008 ◽  
The Global Financial Crisis

This article analyses how creditor rights affect the trade credit channel of monetary policy. We also aim to test whether these effects were conditioned by the global financial crisis of 2008. Using a sample of 15,356 firms from 29 countries (2001–2017), we found that in normal times or in countries not very severely affected by the financial crisis, trade credit receivables increase during monetary restrictions. Moreover, this increase is less pronounced as creditor protection strengthens. In countries strongly affected by the financial crisis, however, trade credit receivables do not react or even decrease after monetary expansions, regardless of the degree of creditor protection. Furthermore, the results of trade credit payables and net trade credit are not conclusive. JEL CLASSIFICATION: E52; K22; G32

scholarly journals Feminist and stratification theories' lessons from the crisis and their relevance for post-Keynesian theory

2019 ◽  
Vol 16 (2) ◽  
pp. 193-207 ◽  
Author(s):  
Stephanie Seguino
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Class Inequality ◽  
Negative Effects ◽  
Race And Gender ◽  
And Gender ◽  
The Many ◽  
The Global Financial Crisis ◽  
Fiscal And Monetary Policy

The many contributions of post-Keynesian economists to understanding the causes of the global financial crisis that began in 2008 could be enhanced by integrating the research by feminist and stratification economists. These groups have produced a body of work analysing trends in inter-group and intra-class inequality that led up to the crisis and theoretically inform how we assess the distribution of the negative effects of the crisis by class, race, and gender. Further, this body of work has assessed the potential for fiscal and monetary policy to promote greater equality while reducing intra-class competition and conflict.

scholarly journals Unconventional U.S. Monetary Policy: New Tools, Same Channels?

2018 ◽  
Vol 11 (4) ◽  
pp. 71 ◽  
Author(s):  
Martin Feldkircher ◽  
Florian Huber
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Extended Period ◽  
Bank Lending ◽  
Distinct Pattern ◽  
Output Growth ◽  
Monetary Policy Shock ◽  
The Global Financial Crisis

In this paper, we compare the transmission of a conventional monetary policy shock with that of an unexpected decrease in the term spread, which mirrors quantitative easing. Employing a time-varying vector autoregression with stochastic volatility, our results are two-fold: First, the spread shock works mainly through a boost to consumer wealth growth, while a conventional monetary policy shock affects real output growth via a broad credit/bank lending channel. Second, both shocks exhibit a distinct pattern over our sample period. More specifically, we find small output effects of a conventional monetary policy shock during the period of the global financial crisis and stronger effects in its aftermath. This might imply that when the central bank has left the policy rate unaltered for an extended period of time, a policy surprise might boost output particularly strongly. By contrast, the spread shock has affected output growth most strongly during the period of the global financial crisis and less so thereafter. This might point to diminishing effects of large-scale asset purchase programs.

Sign in / Sign up

Export Citation Format

Share Document