a column by Cristiano Cantore, Filippo Ferroni and Miguel León-Ledesma for VOX: CEPR’s Policy Portal
Despite its importance, there is no systematic empirical evidence on the effect of monetary policy shocks on the share of output allocated to wages.
Using data for five developed economies, this column finds that standard models generate the ‘wrong sign’ for the effect when compared to the empirical results, and that the labour share temporarily increases following a positive shock to the interest rate. Using the standard models to analyse the distributional effects of monetary shocks could be misleading.
Continue reading
Showing posts with label interest_rates. Show all posts
Showing posts with label interest_rates. Show all posts
Friday, 29 March 2019
Friday, 11 January 2019
Unconventional Monetary Policies in the Euro Area, Japan, and the United Kingdom
an article by Giovanni Dell’Ariccia, Pau Rabanal and Damiano Sandri (International Monetary Fund, Washington, DC) published in Journal of Economic Perspectives Volume 32 Number 4 (Fall 2018)
Abstract
The global financial crisis hit hard in the euro area, the United Kingdom, and Japan. Real GDP from peak to trough contracted by about 6 percent in the euro area and the United Kingdom and by 9 percent in Japan.
In all three cases, central banks cut interest rates aggressively and then, as policy rates approached zero, deployed a variety of untested and unconventional monetary policies. In doing so, they hoped to restore the functioning of financial markets, and also to provide further monetary policy accommodation once the policy rate reached the zero lower bound.
In all three jurisdictions, the strategy entailed generous liquidity support for banks and other financial intermediaries and large-scale purchases of public (and in some cases private) assets. As a result, central banks' balance sheets expanded to unprecedented levels.
This paper examines the experience with unconventional monetary policies in the euro zone, the United Kingdom, and Japan.
The paper starts with a discussion of how quantitative easing, forward guidance, and negative interest rate policies work in theory, and some of their potential side effects. It then reviews the implementation of unconventional monetary policy by the European Central Bank, the Bank of England, and the Bank of Japan, including a narrative of how central banks responded to the crisis and the evidence on the effects of unconventional monetary policy actions.
JEL Classification: E23, E32, E43, E44, E52, G01, H63
Full text (PDF 26pp)
Abstract
The global financial crisis hit hard in the euro area, the United Kingdom, and Japan. Real GDP from peak to trough contracted by about 6 percent in the euro area and the United Kingdom and by 9 percent in Japan.
In all three cases, central banks cut interest rates aggressively and then, as policy rates approached zero, deployed a variety of untested and unconventional monetary policies. In doing so, they hoped to restore the functioning of financial markets, and also to provide further monetary policy accommodation once the policy rate reached the zero lower bound.
In all three jurisdictions, the strategy entailed generous liquidity support for banks and other financial intermediaries and large-scale purchases of public (and in some cases private) assets. As a result, central banks' balance sheets expanded to unprecedented levels.
This paper examines the experience with unconventional monetary policies in the euro zone, the United Kingdom, and Japan.
The paper starts with a discussion of how quantitative easing, forward guidance, and negative interest rate policies work in theory, and some of their potential side effects. It then reviews the implementation of unconventional monetary policy by the European Central Bank, the Bank of England, and the Bank of Japan, including a narrative of how central banks responded to the crisis and the evidence on the effects of unconventional monetary policy actions.
JEL Classification: E23, E32, E43, E44, E52, G01, H63
Full text (PDF 26pp)
Monday, 27 February 2017
The crowding out effect from the European debt crisis perspective: Eurozone experience
an article by Baki Demirel and İlhan Eroğlu (Gaziosmanpasa University, Tokat, Turkey) and Cumhur Erdem (Abant İzzet Baysal University, Bolu, Turkey) published in International Journal of Sustainable Economy Volume 9 Number 1 (2017)
Abstract
The present study aims to measure the crowding out effect for the countries in the Eurozone that have tried to finance budget deficits through borrowing. We have examined the effects of government debt, government expenditure, interest rate and growth rate on private investments for the 2000-2015 period.
The results show that government debt, government expenditure, interest rates and budget deficits all affect private investment negatively and the impact of economic growth is positive.
The findings of the study support the existence of the crowding out effect in the Eurozone for the period of 2000-2015.
Abstract
The present study aims to measure the crowding out effect for the countries in the Eurozone that have tried to finance budget deficits through borrowing. We have examined the effects of government debt, government expenditure, interest rate and growth rate on private investments for the 2000-2015 period.
The results show that government debt, government expenditure, interest rates and budget deficits all affect private investment negatively and the impact of economic growth is positive.
The findings of the study support the existence of the crowding out effect in the Eurozone for the period of 2000-2015.
Subscribe to:
Posts (Atom)
