When domestic and foreign QE overlap: evidence from Sweden

Paola Di Casola () and Pär Stockhammar ()
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Paola Di Casola: Monetary Policy Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Pär Stockhammar: Monetary Policy Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

No 404, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: We estimate the effects of domestic and foreign quantitative easing (QE) programmes on a small open economy, Sweden, using a structural BVAR model. Domestic QE raised GDP, lowered unemployment and depreciated the currency, while effects on inflation are less clear. The ECB QE had large positive effects on both GDP and inflation in Sweden, also due to the endogenous response of domestic QE to the foreign one. In terms of transmission channels, domestic QE improved lending conditions for households and lowered expected future rates, while foreign QE improved financing conditions for firms.

Keywords: Quantitative Easing; international spillovers; transmission channels; small open economy; Bayesian VAR models (search for similar items in EconPapers)
JEL-codes: E44 E52 F41 G15 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2021-05-01
New Economics Papers: this item is included in nep-cwa, nep-eec, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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