The lessons from QE and other 'unconventional' monetary policies - evidence from the Bank of England

This paper investigates the effectiveness of the ‘quantitative easing’ policy, as implemented by the Bank of England in March 2009. Similar policies had been previously implemented in Japan, the U.S. and the Eurozone. Th
This paper investigates the effectiveness of the ‘quantitative easing’ policy, as implemented by the Bank of England in March 2009. Similar policies had been previously implemented in Japan, the U.S. and the Eurozone. The effectiveness is measured by the impact of Bank of England policies (including, but not limited to QE) on nominal GDP growth – the declared goal of the policy, according to the Bank of England. Unlike the majority of the literature on the topic, the general-to-specific econometric modeling methodology (a.k.a. the ‘Hendry’ or ‘LSE’ methodology) is employed for this purpose. The empirical analysis indicates that QE as defined and announced in March 2009 had no apparent effect on the UK economy. Meanwhile, it is found that a policy of ‘quantitative easing’ defined in the original sense of the term (Werner, 1994) is supported by empirical evidence: a stable relationship between a lending aggregate (disaggregated M4 lending, i.e. bank credit for GDP transactions) and nominal GDP is found. The findings imply that BoE policy should more directly target the growth of bank credit for GDP-transactions.
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Metadaten
Author:Victor Lyonnet, Richard A. Werner
URN:urn:nbn:de:hebis:30:3-241110
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2011,29
Series (Serial Number):CFS working paper series (2011, 29)
Publisher:Goethe-Univ., House of Finance, Center for Financial Studies
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2011
Year of first Publication:2011
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2012/02/07
Tag:Central Banking; General-to-specific Methodology; Monetary Policy; Nominal GDP Growth; Quantitative Easing
Issue:Version June 29, 2011
Pagenumber:46
HeBIS PPN:312197330
Institutes:House of Finance (HoF)
Center for Financial Studies (CFS)
Dewey Decimal Classification:332 Finanzwirtschaft
JEL-Classification:E41 Demand for Money
E52 Monetary Policy
E58 Central Banks and Their Policies
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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