Economics at your fingertips  

Does a big bazooka matter? Quantitative easing policies and exchange rates

Luca Dedola, Georgios Georgiadis, Johannes Gräb () and Arnaud Mehl ()

Research Bulletin, 2020, vol. 76

Abstract: What does quantitative easing (QE) really mean for the exchange rate? This article explains how the relevant effects can be estimated using a statistical methodology derived from theory. The results suggest that QE has large and persistent effects on the USD/EUR exchange rate, mainly through shifts in exchange rate risk and short-term interest rates between the two currencies. Changes in expectations about the future monetary policy stance, reflecting the “signalling channel” of monetary policy, also affect how the USD/EUR exchange rate responds to QE. JEL Classification: F41

Keywords: QE dynamic effects; Signalling channels of QE; UIP and CIP deviations (search for similar items in EconPapers)
Date: 2020-10
Note: 80922
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) ... 0~85fb68a983.en.html (text/html) ... 20~85fb68a983.en.pdf (application/pdf)

Related works:
Journal Article: Does a big bazooka matter? Quantitative easing policies and exchange rates (2021) Downloads
Working Paper: Does a Big Bazooka Matter? Quantitative Easing Policies and Exchange Rates (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Research Bulletin from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().

Page updated 2021-03-08
Handle: RePEc:ecb:ecbrbu:2020:0076: