UK monetary and fiscal policy since the great recession - an evaluation

Vo Phuong Mai Le, David Meenagh, A. Patrick Minford and Ziqing Wang

Applied Economics, 2025, vol. 57, issue 48, 7809-7837

Abstract: This paper quantifies the economic impacts of the Bank of England’s quantitative easing (QE) policy, implemented in response to the global financial crisis. Using an open economy Dynamic Stochastic General Equilibrium (DSGE) model, we demonstrate that monetary policy can remain effective even when nominal interest rates have reached the zero lower bound. Our analysis shows that QE measures have significantly influenced economic stabilization. We estimate and test the model using the indirect inference method, and our simulations indicate that a nominal GDP targeting rule implemented through money supply could be the most effective monetary policy regime. Additionally, our findings suggest that a robust, monetary active regime with nominal GDP targeting could significantly enhance economic stabilization efforts.

Date: 2025
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Working Paper: UK monetary and fiscal policy since the Great Recession- an evaluation (2023)
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DOI: 10.1080/00036846.2024.2393897

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