Sayuri Shirai, 16 October 2018

The Bank of Japan has bought massive quantities of Japanese stocks in a bid to increase aggregate demand and inflation, and to encourage Japanese savers to take on more risk. This column surveys the effectiveness of this quantitative easing programme and identifies several key issues, including stock prices not rising in proportion to profits, the overvaluation of some small-cap stocks, and adverse impacts on corporate governance. It argues that before taking any steps toward monetary policy normalisation, the Bank of Japan should introduce flexibility in interpreting the 2% price stability target.

James Hamilton, 12 October 2018

Quantitative easing policies have been used widely over the past decade. This column explores how markets responded to the announcements surrounding the three phases of the Fed’s quantitative easing operations. It also discusses a basic identification problem with high-frequency event studies, namely, that they cannot resolve whether the announcement mattered because it conveyed information about monetary policy or about economic fundamentals. 

Karl Walentin, 11 September 2014

Central banks have resorted to various unconventional monetary policy tools since the onset of the Global Crisis. This column focuses on the macroeconomic effects of the Federal Reserve’s large-scale purchases of mortgage-backed securities – in particular, through reducing the ‘mortgage spread’ between interest rates on mortgages and government bonds at a given maturity. Although large-scale asset purchases are found to have substantial macroeconomic effects, they may not necessarily be the best policy tool at the zero lower bound.

Events

CEPR Policy Research