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Monetary policy in exceptional times

Michele Lenza (), Huw Pill and Lucrezia Reichlin ()

No 1253, Working Paper Series from European Central Bank

Abstract: This paper describes the response of three central banks to the 2007-09 financial crisis: the European Central Bank, the Federal Reserve and the Bank of England. In particular, the paper discusses the design, implementation and impact of so-called "non-standard" monetary policy measures focusing on those introduced in the euro area in the aftermath of the failure of Lehman Brothers in September 2008. Having established the impact of these measures on various observable money market spreads, we propose an empirical exercise intended to quantify the macroeconomic impact of non-standard monetary policy measures insofar as it has been transmitted via these spreads. The results suggest that non-standard measures have played a quantitatively significant role in stabilising the financial sector and economy after the collapse of Lehman Bros., even if insufficient to avoid a significant fall in economic and financial activity. JEL Classification: E52, E58

Keywords: financial crisis; Non-standard monetary policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
Date: 2010-10
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101253

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