An Analysis of the Literature on International Unconventional Monetary Policy

Saroj Bhattarai and Christopher Neely

Journal of Economic Literature, 2022, vol. 60, issue 2, 527-97

Abstract: This paper evaluates the literature on international unconventional monetary policies (UMPs). Introducing market segmentation, limits-to-arbitrage, and time-consistent policy in standard models permits a theoretical role for UMP. Empirical studies provide compelling evidence that UMPs influenced international asset prices and tail risk in the desired manner. Calibrated modeling and vector autoregressive (VAR) exercises imply that these policies also improved macroeconomic outcomes. We assess the recent debate on the empirical evidence and discuss central bank assessments of UMP. Despite qualified successes, we recommend that UMP be reserved for crises and/or when the zero bound constrains conventional monetary policy.

JEL-codes: E31 E43 E44 E52 E58 G12 G21 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (36)

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Working Paper: An Analysis of the Literature on International Unconventional Monetary Policy (2020)
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DOI: 10.1257/jel.20201493

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