Designing QE in a fiscally sound monetary union

Tilman Bletzinger and Leopold von Thadden

Research Bulletin, 2018, vol. 47

Abstract: In response to the global financial crisis the central banks of many advanced economies have adopted large-scale asset purchase programmes, with particular prominence given to purchases of sovereign debt. These programmes – often labelled as quantitative easing or QE – are intended to overcome the lower-bound constraint on short-term interest rates in an environment of persistently low inflation rates. This article offers a conceptual perspective on a number of design issues of QE that are specific to monetary unions. In general, design options for QE depend on the degree of institutional completeness of a monetary union. This is illustrated with findings from a stylised model of a monetary union which assumes an environment in which the central bank can always be assured that national fiscal policies are sustainable. Such setting is conducive to a particularly effective design of QE. JEL Classification: E43, E52, E61, E63

Keywords: Lower Bound; Monetary Policy; Monetary Union; Quantitative Easing (search for similar items in EconPapers)
Date: 2018-06
Note: 2652553
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Citations: View citations in EconPapers (8)

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Journal Article: Designing QE in a fiscally sound monetary union (2021)
Working Paper: Designing QE in a fiscally sound monetary union (2018)
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