scholarly journals Comprehensive Monetary Easing In The Eurozone: Lessons Learnt From Japan

2021 ◽  
Author(s):  
Leef Dierks
Keyword(s):  
Economic Growth ◽  
Quantitative Easing ◽  
Fixed Income ◽  
Fixed Income Securities ◽  
Unconventional Monetary Policy ◽  
Medium Term ◽  
Inflation Target ◽  
Monetary Policies ◽  
European Central ◽  
Bank Of Japan

The European Central Bank’s (ECB) unconventional monetary policy has so far failed to deliver the much-anticipated results. In October 2019, the euro area’s (EA-19) HICP-inflation fell to a three-year low of just 0.7% year-over-year (y/y), thus being far below the ECB’s goal of “below, but close to 2.00% over the medium term”. By November 2019, HICP-inflation had recovered to a modest 1.0% (y/y) with seasonally-adjusted Eurozone GDP growing at a disappointing 1.2% (y/y) in Q3 2019 compared with the same quarter of the previous year (Eurostat, 2019). Inevitably, these developments raise the question to what extent the ECB might eventually consider extending its Quantitative Easing (QE) program, i.e. its €2.6tn asset purchase programs (APP) beyond the ongoing €20bn-per-month purchase of fixed income securities. Any further easing could, for example, foresee an enhancement of the securities purchased to inter alia include shares of stock. In contrast to widely held beliefs, this by no means were an entirely unprecedented phenomenon, but corresponded to measures (so-called comprehensive monetary easing, CME) adopted by the Bank of Japan (BoJ) as early as 2010 (Bank of Japan, 2010a). Notwithstanding the BoJ’s CME, however, HICP-inflation in Japan fell to 0.0% (y/y) in December 2019, the latest date for which data were available, which caused annual HICP-inflation for the full year to drop to only 0.8% (y/y). Based on the experiences gained in Japan, and notwithstanding a potential revision of the ECB’s inflation target to a 1.5% to 2.5% range, this contribution will analyse the extent to which an expansion of the ECB’s set of hitherto employed unconventional monetary policies through CME could sustainably stimulate economic growth - and inflation - in the euro area. Preliminary results suggest a rather muted impact.

scholarly journals The Normalization of the European Central Bank’s Monetary Policy from an Austrian Perspective

2018 ◽  
pp. 359-371
Author(s):  
Leef H. Dierks
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Euro Area ◽  
Quantitative Easing ◽  
Fixed Income ◽  
Fixed Income Securities ◽  
Market Prices ◽  
European Central ◽  
The Us ◽  
Low Interest Rates

After several years of historically low interest rates and quantitative easing, the European Central Bank (ECB) has finally started wind-ing down its ultra-accommodative monetary policy in late 2018. Among the first steps tapering its asset purchase programme (APP), which foresees monthly purchases of up to €30bn per month until September 2018 — «or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of infla-tion consistent with its inflation aim» (ECB, 2018a). By then, pur-chases of euro area fixed income securities on behalf of the ECB will have mounted to as much as €2,550bn or almost 90% of euro area GDP (€2,834bn in market prices in Q4 2017, the latest date for which data were available (ECB, 2018b)). Further, according to market esti-mates, the first hike of the main refinancing rate, which was slashed to 0% in March 2016, could emerge in Q1 2019, thereby following a tightening of the monetary policy the US Federal Reserve (FED) had already started in December 2015 (FED, 2015).

scholarly journals Achieving the Bank of Japan’s Inflation Target

2019 ◽  
Vol 19 (229) ◽  
Author(s):  
Gee Hee Hong ◽  
Rahul Anand ◽  
Yaroslav Hul
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Baseline Scenario ◽  
Unconventional Monetary Policy ◽  
Medium Term ◽  
Macroeconomic Policies ◽  
Inflation Target ◽  
Bank Of Japan ◽  
Positive Shock ◽  
Central Bank Credibility

The Bank of Japan has introduced various unconventional monetary policy tools since the launch of Abenomics in 2013, to achieve the price stability target of 2 percent inflation. In this paper, a forward-looking open-economy general equilibrium model with endogenously determined policy credibility and an effective lower bound is developed for forecasting and policy analysis (FPAS) for Japan. In the model’s baseline scenario, the likelihood of the Bank of Japan reaching its 2 percent inflation target over the medium term is below 40 percent, assuming the absence of other policy reactions aside from monetary policy. The likelihood of achieving the inflation target is even lower under alternative risk scenarios. A positive shock to central bank credibility increases this likelihood, and would require less accommodative macroeconomic policies.

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 ARE THE EFFECTS OF UNCONVENTIONAL MONETARY POLICY ON FINANCIAL MARKETS CAUSING BUBBLES?

2019 ◽  
Vol 1 (1) ◽  
pp. 1-1 ◽  
Author(s):  
Daniel Lacalle
Keyword(s):  
Financial Markets ◽  
Central Banks ◽  
Unintended Consequences ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
Monetary Policies ◽  
Policy Makers ◽  
The Past ◽  
Long Run ◽  
Asset Classes

Cheap money can become very expensive in the long run. Unconventional monetary policies have been the main tools of central banks to tackle the economic crisis. In this paper we aim to understand whether these policies have created distortions in the fi nancial markets and if we can be concerned about the creation of “bubbles”, considering whether quantitative easing has impacted fi nancial asset classes’ valuations beyond reasonable fundamentals. I conclude that there is empirical evidence of inordinate expansion of multiples and that central bank policy makers should include “fi nancial market infl ation” as well as consumer price indices (CPI) in their assessment of infl ation expectations. I believe that this should be an essential analysis to avoid unintended consequences in the future, and a possible next fi nancial crisis that central banks will be unable to face with the same tools of the past.

scholarly journals The diversity of wage regimes: why the Eurozone is too heterogeneous for the Euro

2017 ◽  
Vol 10 (1) ◽  
pp. 71-96 ◽  
Author(s):  
Martin Höpner ◽  
Mark Lutter
Keyword(s):  
Economic Growth ◽  
Wage Bargaining ◽  
Foreseeable Future ◽  
Labor Costs ◽  
Inflation Target ◽  
European Central ◽  
Dependent Variables ◽  
Unit Labor Costs ◽  
Analyze Data ◽  
Labor Regimes

Why did the transnational synchronization of wage inflations fail during the first 10 years of the euro? We analyze data from 1999 to 2008 for 12 euro members and estimate increases of nominal unit labor costs both in the overall economy and in manufacturing as dependent variables. While our analysis confirms that differences in economic growth shaped the inflation of labor costs, we add a political-institutional argument to the debate and argue that the designs of the wage regimes had an additional, independent impact. In coordinated labor regimes, increases in nominal unit labor costs tended to fall below the European Central Bank’s inflation target, while in uncoordinated labor regimes, the respective increases tended to exceed the European inflation target. Due to the stickiness of wage-bargaining institutions, the lack of the capacity to synchronize inflation is not likely to disappear in the foreseeable future.

scholarly journals Polityka pieniężna Europejskiego Banku Centralnego a zagrożenie deflacją w Unii Europejskiej

2015 ◽  
Vol 1 (3) ◽  
pp. 89-102
Author(s):  
Jan L. Bednarczyk
Keyword(s):  
Economic Growth ◽  
Central Bank ◽  
European Central Bank ◽  
Policy Tools ◽  
Inflation Target ◽  
Monetary Base ◽  
European Central

The aim of the paper is to assess whether the range of non-standard measuresundertaken by the European Central Bank between 2014–2015 may turn outinsufficient to stimulate demand and overcome deflation. The causes for the presentsituation are the weaknesses of mechanisms transmitting monetary policyimpulses to the economy resulting from: 1) pessimistic expectations withinEurozone regarding economic growth, 2) lack among policy tools of any forwardguidance for the desirable mid-term level of crucial real magnitudes, 3) lack ofsufficient flexibility in the inflation target policy, 4) the weakness of the securitiespurchase programmes which exerted only a temporary effect on the ECB’sbalance sheet and monetary base

scholarly journals The Impact of Monetary Policies on the Sustainable Economic and Financial Development in the Euro Area Countries

2020 ◽  
Vol 12 (22) ◽  
pp. 9367
Author(s):  
Dana Kiseľáková ◽  
Paulina Filip ◽  
Erika Onuferová ◽  
Tomáš Valentiny
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Euro Area ◽  
Quantitative Easing ◽  
Government Bond ◽  
Bond Yields ◽  
Monetary Policies ◽  
Goods And Services ◽  
European Central ◽  
The Impact

One of the responses of the monetary policies of central banks to the sustainable development on financial markets, which also affected other markets and economic growth, is the role of non-standard monetary policies, referred to as quantitative easing in the form of Asset Purchase Programme. In this paper, the following main research problem was addressed: How can the Asset Purchase Programme help the European Central Bank fulfill its mandate of supervising the financial stability and financial development? Based on this, we formulated the main objective: to identify the impact of monetary policies on the dynamics of financial markets development, labor markets, and the markets for goods and services. As part of the applied methodology, the impact of the quantitative easing on the government bond yields curve was based on an indirect assessment using the seemingly unrelated regression model, considering the use of parameters from the functional benchmark form. Through the vector error correction model, another additional impact of the application of the monetary policy mechanisms on selected indicators of the considered markets was identified. The relationship between financial markets and economic growth was determined on the basis of the two-stage least square model using endogeneity control instruments. Applying the changes identified by the above models allowed us to determine the expected change in the rate of growth of the aggregate output of the euro area countries. Based on our results, we found out that Asset Purchase Programme had an impact on the growth of government bond yields issued by euro area countries, on lowering the risk rate on corporate bond markets, and increasing the nominal value of shares. In addition, growth in inflation and a decline in interest rates were affected. Finally, the European Central Bank (ECB)’s non-standard monetary policies have positively affected and stimulated the labor market and development in goods and services markets, referred to the sustainable financial development.

Ideas, Networks, and Monetary Politics in Japan

2018 ◽  
pp. 1-8
Author(s):  
Gene Park ◽  
Saori N. Katada ◽  
Giacomo Chiozza ◽  
Yoshiko Kojo
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Japanese Economy ◽  
Monetary Policies ◽  
Bank Of Japan ◽  
Economic Revitalization ◽  
The Global Financial Crisis ◽  
Nuclear Crisis

This introductory chapter provides a background of the monetary politics in Japan. Japan's economy dipped into deflation in the mid-1990s and again more seriously in the late 1990s; this period was followed by a prolonged period of deflation from the end of the 1990s through the mid-2000s. With the start of the global financial crisis (GFC) in 2008, economic growth dropped sharply, as did prices. Then the Japanese economy suffered another blow with the devastating triple disaster of 2011: earthquake, tsunami, and nuclear crisis. Despite these challenges and seemingly unshakeable deflation, the Bank of Japan (BOJ) remained reluctant to embrace aggressive unconventional monetary policies. Policy then shifted sharply at the end of 2012 under Prime Minister Abe Shinzō during his second term. Abe promised aggressive monetary measures to reflate the economy as part of his “Abenomics” package of economic revitalization policies.

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