The consequences of unconventional monetary policy in euro area in times of monetary easing
Research background: In this research paper, an attempt is made to evaluate the impacts of ECB’s unconventional monetary policy which has been applied after Global Financial Crisis. Because of the new economic and monetary conditions, the effectiveness of conventional monetary tools has been questio...
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| Format: | Article |
| Language: | English |
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Institute of Economic Research
2018-12-01
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| Series: | Oeconomia Copernicana |
| Subjects: | |
| Online Access: | http://economic-research.pl/Journals/index.php/oc/article/view/1083 |
| _version_ | 1818146698126426112 |
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| author | Martin Pažický |
| author_facet | Martin Pažický |
| author_sort | Martin Pažický |
| collection | DOAJ |
| description | Research background: In this research paper, an attempt is made to evaluate the impacts of ECB’s unconventional monetary policy which has been applied after Global Financial Crisis. Because of the new economic and monetary conditions, the effectiveness of conventional monetary tools has been questioned.
Purpose of the article: Designed models examine the consequences of unconventional monetary policy for macroeconomic variables, monetary variables and interest rates in the euro area. Particular attention is paid to the response of the price level, represented by HICP, to various monetary policy innovations. Except a shock in credit multiplier and asset purchase programme (APP), also the effectiveness of a conventional monetary tool, such as main refinancing operation (MRO) interest rate, is inspected.
Methods: Use has been made of impulse responses from structural VAR models to analyze a large sample that covers the time horizon of 1999 to 2016. Several econometric tests are performed to provide a profound analysis. The conclusions from baseline models are verified in multiple robustness check models, which are specified under alternative conditions.
Findings & Value added: It has been found that, in the aftermath of the Global Financial Crisis, conventional monetary instruments are effective in the short-run. In the long-run, unconventional monetary policy has a greater potential to stabilize the economy than the traditional interest rate transmission channel. The conclusions from the baseline models are verified in multiple robustness check models, which are specified under alternative conditions. |
| first_indexed | 2024-12-11T12:23:29Z |
| format | Article |
| id | doaj.art-7659fef5f3d54373a8d11827cd7b7f94 |
| institution | Directory Open Access Journal |
| issn | 2083-1277 2353-1827 |
| language | English |
| last_indexed | 2024-12-11T12:23:29Z |
| publishDate | 2018-12-01 |
| publisher | Institute of Economic Research |
| record_format | Article |
| series | Oeconomia Copernicana |
| spelling | doaj.art-7659fef5f3d54373a8d11827cd7b7f942022-12-22T01:07:28ZengInstitute of Economic ResearchOeconomia Copernicana2083-12772353-18272018-12-019458161510.24136/oc.2018.0291083The consequences of unconventional monetary policy in euro area in times of monetary easingMartin Pažický0Comenius University in BratislavaResearch background: In this research paper, an attempt is made to evaluate the impacts of ECB’s unconventional monetary policy which has been applied after Global Financial Crisis. Because of the new economic and monetary conditions, the effectiveness of conventional monetary tools has been questioned. Purpose of the article: Designed models examine the consequences of unconventional monetary policy for macroeconomic variables, monetary variables and interest rates in the euro area. Particular attention is paid to the response of the price level, represented by HICP, to various monetary policy innovations. Except a shock in credit multiplier and asset purchase programme (APP), also the effectiveness of a conventional monetary tool, such as main refinancing operation (MRO) interest rate, is inspected. Methods: Use has been made of impulse responses from structural VAR models to analyze a large sample that covers the time horizon of 1999 to 2016. Several econometric tests are performed to provide a profound analysis. The conclusions from baseline models are verified in multiple robustness check models, which are specified under alternative conditions. Findings & Value added: It has been found that, in the aftermath of the Global Financial Crisis, conventional monetary instruments are effective in the short-run. In the long-run, unconventional monetary policy has a greater potential to stabilize the economy than the traditional interest rate transmission channel. The conclusions from the baseline models are verified in multiple robustness check models, which are specified under alternative conditions.http://economic-research.pl/Journals/index.php/oc/article/view/1083unconventional monetary policycredit multiplierinterest ratequantitative easing |
| spellingShingle | Martin Pažický The consequences of unconventional monetary policy in euro area in times of monetary easing Oeconomia Copernicana unconventional monetary policy credit multiplier interest rate quantitative easing |
| title | The consequences of unconventional monetary policy in euro area in times of monetary easing |
| title_full | The consequences of unconventional monetary policy in euro area in times of monetary easing |
| title_fullStr | The consequences of unconventional monetary policy in euro area in times of monetary easing |
| title_full_unstemmed | The consequences of unconventional monetary policy in euro area in times of monetary easing |
| title_short | The consequences of unconventional monetary policy in euro area in times of monetary easing |
| title_sort | consequences of unconventional monetary policy in euro area in times of monetary easing |
| topic | unconventional monetary policy credit multiplier interest rate quantitative easing |
| url | http://economic-research.pl/Journals/index.php/oc/article/view/1083 |
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