UK monetary and fiscal policy since the Great Recession- an evaluation

Vo Phuong Mai Le, David Meenagh, A. Patrick Minford and Ziqing Wang ()
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Ziqing Wang: Sheffield Hallam University, Sheffield, United Kingdom

No E2023/9, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: This paper explores the economic impacts of the Bank of England s quantitative easing policy, implemented as a 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. 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 analysis suggests that a robust, active fiscal policy regime with nominal GDP targeting could significantly enhance economic stabilization efforts.

Keywords: Quantitative easing; Financial friction; SOE-DSGE; Indirect inference; Zero bound (search for similar items in EconPapers)
JEL-codes: C51 E44 E52 E58 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2023-04
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-eec, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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