Wei Cui, Vincent Sterk, 09 January 2019

The effects of quantitative easing are poorly understood, in part because standard models of monetary policy predict that it doesn't work. This column uses a model in which households can be unequal and hold assets with different degrees of liquidity to show that quantitative easing can provide a powerful stimulus to the macroeconomy, and that it avoided a large decline in output and inflation during 2009. Nevertheless, side-effects on inequality mean that social welfare tends to be lower under quantitative easing than under conventional policy.

Patrick O'Brien, Nuno Palma, 03 September 2016

Today's unconventional central bank policies have historical precedent. One example is the suspension of convertibility of banknotes into gold by the Bank of England between 1797 and 1821. This column argues that, although there were important differences between then and now, it demonstrates that bank reputation and interaction between bank and state are vital to the success of unconventional policies. Also, short-term unconventional policies may persist long after a crisis has passed.

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