Mickey Levy, 16 May 2014

As banks repay their loans from the Long-Term Refinancing Operation, the ECB’s balance sheet is shrinking. This column argues that, given the slow recovery and sustained low inflation, the ECB should replace its bank lending programme with quantitative easing. Buying short-term government debt would be consistent with the ECB’s inflation target, would keep the ECB’s monetary policy separate from its role in bank supervision, and would create a built-in exit strategy from unconventional policy.

Jeffrey Frankel, 24 March 2014

The Eurozone needs to further ease monetary policy because under the current low inflation and high unemployment periphery countries need to suffer painful deflation. However, the ECB faces challenges other central banks do not face. This column proposes a way to overcome some of these hurdles. It argues that the ECB should buy US treasury securities, lowering the foreign exchange value of the euro. That would be the best way to restore the export sector of the periphery countries.

Mickey Levy, 21 February 2014

A popular view among economic commentators is that rich countries face a serious risk of deflation, and should adopt aggressive macroeconomic stimulus policies to ward it off. This column argues that despite similar headline inflation rates, the US, Europe, and Japan in fact face very different macroeconomic conditions. In the US, much of the recent disinflation is attributable to positive supply-side developments. In Europe, an aggressive round of quantitative easing might encourage policymakers to delay the reforms that are necessary to avoid a prolonged Japanese-style malaise.

Andrew Burns, Mizudo Kida, Jamus Lim, Sanket Mohapatra, Marc Stocker, 21 January 2014

The Federal Reserve has begun to ‘taper’ its programme of quantitative easing. The ‘taper tantrum’ that followed the announcement of tapering in May 2013 suggests that the normalisation of rich countries’ unconventional monetary policies may lead to capital outflows and currency depreciations in emerging markets. This column presents the results of recent World Bank research into these effects. In the baseline scenario, the unwinding of QE is predicted to reduce capital inflows by about 10%, or 0.6% of developing-country GDP by 2016. However, if markets react abruptly, capital flows could decline by as much as 80% for several months.

Biagio Bossone, 05 October 2013

So-called ‘helicopter money’ policies – those in which government spending or transfers to households are paid for by printing money – involve both monetary and fiscal policy. This means they require extraordinary cooperation between the government and the central bank, which potentially undermines central-bank independence. However, emergency policies of this type may be justified during extreme systemic crises. Injections of helicopter money can increase net wealth and thus stimulate spending, and this mechanism is particularly important when conventional monetary policy is stuck at the zero lower bound.

Viral Acharya, Richard Portes, Richard Reid, 03 July 2013

Many central banks have recently employed unprecedented expansionary monetary policy, keeping interest rates at near-zero levels for an extended period of time. Quantitative easing interventions have been employed to affect asset prices directly, most notably in government-bond and mortgage markets, in order to keep sovereign and mortgage borrowing costs low. CEPR recently organised a conference to discuss existing theory and empirical evidence on the implications of an extended phase of unconventional monetary policy. This short column outlines the key issues and also includes a Vox Views video summary of the event.

Charles Wyplosz, 14 October 2013

Exiting from unconventional monetary policies is a key challenge facing policymakers in advanced nations and a key worry for everyone else. This column introduces the new 'Geneva Report' on the subject, Exit Strategies, by Alan Blinder, Thomas Jordan, Donald Kohn and Frederic Mishkin. The report considers what the post-exit world will look like, how we can get there and the long-run impact on central banking.

Lucrezia Reichlin, Richard Baldwin, 14 April 2013

Inflation targeting did not prevent financial instability before the Crisis nor did it provide sufficient stimulus after the Crisis. In a new Vox eBook, 14 world-renowned scholars, practitioners and market participants analyse inflation targeting and its future. They argue that inflation targeting should be refined not replaced. Indeed, it is needed now more than ever to keep expectations anchored while the advanced economies work their way through today’s slow growth, rickety banks, and over-indebted public sectors.

Stephen Grenville, 24 February 2013

What would the overt monetary financing of fiscal deficits involve? This column explains the differences between “printing money”, quantitative easing, and overt monetary finance. Lord Turner’s proposed “helicopter drop” raises issues for banks’ balance sheets and central bank independence.

Richard Wood, 19 December 2012

Five years after the subprime bubble burst, the self-correcting nature of business cycles is being questioned and, subsequently, orthodox macroeconomic policy is starting to be challenged. This column introduces a radical rethink of options open to macroeconomic policymakers, suggesting that in order to simultaneously achieve economic stimulus without increasing debt, new money creation should be used to directly finance on-going budget deficits.

David Miles, 27 November 2012

David Miles talks to Viv Davies about the conclusions of his recent research on quantitative easing and unconventional monetary policy. Miles discusses the different types of 'asset purchasing programmes' adopted by the Bank of England, the Fed and the ECB; they also discuss the importance of current research in these areas and the potential risks associated with quantitative easing. The interview was recorded at the Bank of England on 21 November 2012. [Also read the transcript]

Ethan Ilzetzki, Jonathan Pinder, 20 October 2012

The US economy is struggling out of its deepest recession since the 1930s. In this climate, economic policy promises made by the presidential candidates are critical. This column reviews the facts on the state of the US economy, and how it got there, before reviewing the candidates’ promises. Given the monumental challenges, the lack of policy detail from the candidates is worrying.

Marco Annunziata, 17 September 2012

As the Fed announces a third round of quantitative easing, this column argues that it is unlikely to work. Investment and hiring are held back by huge uncertainty over the long-term outlook and the stimulus provides a monetary bridge over the election gap but little more.

Ryan Banerjee, Sebastiano Daros, David Latto, Nick McLaren, 20 August 2012

A central banker's toolkit these days must include a way of estimating the effect of quantitative easing purchases on government bond yields. With markets savvier than ever in anticipating quantitative easing purchases, estimating the effect has become more difficult. This column by four Bank of England economists introduces a novel empirical approach.

Richard Wood, 18 August 2012

Central banks are running out of conventional tools, and the effectiveness of unconventional ones like QE are being questioned. More radical solutions are being considered. This column sets out the case for monetisation of budget deficits.

Jesús Fernández-Villaverde, Juan Rubio-Ramirez, 11 November 2011

With nominal interest rates in many western countries at or approaching the zero lower bound, economists are calling for more quantitative easing or greater fiscal expansions to generate inflation, reduce real interest rates, and rejuvenate the economy. But what if these policies fail? Or are no longer possible? This column outlines a third way: supply-side policies.

Michael Joyce, Matthew Tong, Robert Woods, 01 November 2011

With the Bank of England recently announcing an additional £75 billion of quantitative easing, a reasonable question to ask is whether the last £200 billion has made any difference. This argues that QE may have helped boost real GDP by as much as 2% and inflation by 1.5%, similar to the effect from a drop in the base rate of around 300 basis points.

Marcus Miller, John Driffill, 27 September 2011

Just what on earth is going on in the global economy? Rather than get caught up in the hysteria, this column says the answers are best found by looking through the pages of history and dusting down some old textbooks.

Heleen Mees, 21 June 2011

With the US economy still faltering, some are suggesting it may be time for a third round of quantitative easing. This column explores the transmission mechanism of monetary policy and how it has broken down in recent years. It argues that, in this climate, the Fed would be wise to avoid another bond-buying programme.

Richard Wood, 03 March 2011

The US, Japan, and Ireland are threatened by the spectres of deficient private demand, rising debt, and a tendency to deflation. This column questions current monetary policy directions, i.e. quantitative easing, and argues that printing money to directly finance fiscal stimulus may be a better option.

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