Does the Way of Financing Quantitative Easing Programmes Matter?

Anna Duszak

Central European Journal of Economic Modelling and Econometrics, 2018, vol. 10, issue 2, 101-131

Abstract: This paper applies a DSGE model to find whether the way of financing QE2 matters for the reaction of the economy. The model includes a segmented bond market structure, thus the large-scale asset purchases may successfully influence the economy. It is shown that the effects on macroeconomic variables are very similar regardless of whether the government finances the purchases by lump-sum taxes or by short-term debt which signifies that the quantitative deviation from Ricardian equivalence introduced by bond market segmentation is insignificant. The redistribution effects caused by financing are noticeable.

Keywords: quantitative easing; unconventional monetary policy; Ricardian equivalence (search for similar items in EconPapers)
JEL-codes: E43 E44 E52 E58 E63 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:psc:journl:v:10:y:2018:i:2:p:101-131

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