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Unconventional monetary policies, with a focus on quantitative easing

Author

Listed:
  • Marc Lavoie

    (University of Paris 13 (CEPN), France and University of Ottawa, Canada)

  • Brett Fiebiger

    (PhD in International Studies, Flinders University, Adelaide, Aus)

Abstract

This article distinguishes between credit easing policies and quantitative easing (QE) policies. The authors argue that there are two broad transmission mechanisms associated with quantitative easing: the Friedmanian mechanism, which is based on the theory of the money multiplier and the fractional-reserve banking system; and the Keynesian mechanism, advocated by Keynes in 1930, which relies on its impact on interest rates. The article also deals with the likely consequences of various incarnations of QE policies: QE done with banks, QE done with non-banks, QE for the people, Corbyn’s people’s QE and green QE. This is done by looking at the impact of these policies on the balance sheets of banks, private agents, the central bank and the government, and on their consequences for the fiscal balance of the government when taking into account the profits that are distributed by the central bank to the government. It is concluded that accounting tricks cannot modify reality.

Suggested Citation

  • Marc Lavoie & Brett Fiebiger, 2018. "Unconventional monetary policies, with a focus on quantitative easing," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 15(2), pages 139-146, September.
    • Handle: RePEc:elg:ejeepi:v:15:y:2018:i:2:p139-146
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    Citations

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    Cited by:

    1. Eiblmeier, Sebastian, 2023. "Differential Effects of Unconventional Monetary Policy," Hannover Economic Papers (HEP) dp-707, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    2. Sawyer, Malcolm & Veronese Passarella, Marco, 2021. "A Comprehensive Comparison of Fiscal and Monetary Policies: A Comparative Dynamics Approach," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 384-404.
    3. Pawe³ Œliwiñski, 2023. "Endogenous money supply, global liquidity and financial transactions: Panel evidence from OECD countries," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 18(1), pages 121-152, March.

    More about this item

    Keywords

    quantitative easing; QE for the people; people’s QE; green QE; fiscal policy;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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