Unconventional monetary policies: a re-appraisal

Claudio Borio and Anna Zabai

No 570, BIS Working Papers from Bank for International Settlements

Abstract: We explore the effectiveness and balance of benefits and costs of so-called "unconventional" monetary policy measures extensively implemented in the wake of the financial crisis: balance sheet policies (commonly termed "quantitative easing"), forward guidance and negative policy rates. Our objective is to provide the reader with a helpful entry point to the burgeoning empirical literature and with a specific perspective on the complex issues involved. We reach three main conclusions: there is ample evidence that, to varying degrees, these measures have succeeded in influencing financial conditions even though their ultimate impact on output and inflation is harder to pin down; the balance of the benefits and costs is likely to deteriorate over time; and the measures are generally best regarded as exceptional, for use in very specific circumstances. Whether this will turn out to be the case, however, is doubtful at best and depends on more fundamental features of monetary policy frameworks. In the paper, we also provide a critique of prevailing analyses of "helicopter money" and explore in more depth the role of negative nominal interest rates in our fundamentally monetary economies, highlighting some risks.

Keywords: unconventional monetary policies; balance sheet policies; forward guidance; negative interest rates (search for similar items in EconPapers)
Pages: 49 pages
Date: 2016-07
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (101)

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Related works:
Chapter: Unconventional monetary policies: a re-appraisal (2018)
Journal Article: UNCONVENTIONAL MONETARY POLICIES: AN APPRAISAL (2010)
Working Paper: Unconventional monetary policies: an appraisal (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:570

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