Central Bank Quantitative Easing as an Emerging Political Liability

Victor Xing

MPRA Paper from University Library of Munich, Germany

Abstract: Officials from major central banks have previously acknowledged QE programs’ distributional effects but expected aggregate economic benefits of these unconventional policies to outweigh their costs. Post-crisis asset price appreciation became well entrenched under the effect of QE, which out-paced median wage growth to unintentionally burden low-to-middle income households and individuals with limited asset ownership. Subsequently, rising inequality fueled discontent and contributed to the rise of anti-establishment political candidates Efforts by elected officials to ease the effects of policy-induced inequality would likely bolster support toward further redistribution policies such as “helicopter money” to threaten central bank monetary policy independence

Keywords: Quantitative Easing; Distributional Effects; Helicopter Money; Debt Monetization (search for similar items in EconPapers)
JEL-codes: E50 E52 H50 (search for similar items in EconPapers)
Date: 2017-09-01
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:81269

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