An Analysis of the Literature on International Unconventional Monetary Policy
Saroj Bhattarai () and
Christopher Neely ()
No 2016-21, Working Papers from Federal Reserve Bank of St. Louis
This paper critically evaluates the literature on international unconventional monetary policies. We begin by reviewing the theories of how such heterogeneous policies could work. Empirically, event studies provide compelling evidence that international asset purchase announcements have strongly influenced international bond yields, exchange rates, and equity prices in the desired manner and curtailed market perceptions of extreme events. Calibrated modeling and vector autoregressive (VAR) exercises imply that these policies significantly improved macroeconomic outcomes, raising output and prices. Central bankers give a measured, positive assessment to most unconventional monetary policy. Despite qualified successes, we recommend that central banks reserve these policies for financial crises and/or times when the zero bound constrains conventional monetary policy.
Keywords: unconventional monetary policy; effective lower bound; quantitative easing; event study (search for similar items in EconPapers)
JEL-codes: E51 E58 E61 F31 G12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2016-11-28, Revised 2018-10-31
Note: Previous title [updated October 2018]: A Survey of the Empirical Literature on U.S. Unconventional Monetary Policy
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