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QE versus the Real Problems in the World Economy

Author

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  • Adrian Blundell-Wignall

    (School of Economics, The University of Sydney, Sydney 2006, Australia
    The author of these remarks is the former Director of the Financial and Enterprise Affairs Directorate of the OECD, and was its representative on the Financial Stability Board Standing Committee on Vulnerabilities. He is currently and adjunct professor at Sydney University, a member of the OECD pension board and Chairman of the Anika Foundation. The comments are those of the author alone, and do not reflect those of any other institution.)

Abstract

These notes are based on parts of a keynote address to the Fourth Annual Conference on Money and Finance at Chapman University on 6–7 September 2019. Quantitative easing (QE) policies have been pushed to extremes and extended well beyond their use-by dates to little plausible effect in achieving the goal of raising inflation and growth. Instead, they are damaging the interbank market (as exemplified by the liquidity crisis in September 2019), adding to the risk of financial crises in the future and taking pressure off policy-makers to deal with the real causes of poor investment, growth and deflation pressure. The shift in where investment is occurring and the special problems of Europe and Brexit are focused upon.

Suggested Citation

  • Adrian Blundell-Wignall, 2020. "QE versus the Real Problems in the World Economy," JRFM, MDPI, vol. 13(1), pages 1-11, January.
    • Handle: RePEc:gam:jjrfmx:v:13:y:2020:i:1:p:11-:d:305145
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    References listed on IDEAS

    as
    1. Ben S. Bernanke & Vincent R. Reinhart, 2004. "Conducting Monetary Policy at Very Low Short-Term Interest Rates," American Economic Review, American Economic Association, vol. 94(2), pages 85-90, May.
    2. Adrian Blundell-Wignall & Paul Atkinson & Caroline Roulet, 2018. "Globalisation and Finance at the Crossroads," Springer Books, Springer, number 978-3-319-72676-2, January.
    3. Allen, Franklin & Carletti, Elena & Qianc, Jun “QJ†& Valenzuela, Patricio, 2013. "Financial Intermediation, Markets, and Alternative Financial Sectors," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 759-798, Elsevier.
    4. Adrian Blundell-Wignall & Caroline Roulet, 2013. "Long-term investment, the cost of capital and the dividend and buyback puzzle," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2013(1), pages 39-52.
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    Cited by:

    1. Sarkis Joseph Khoury & Poorna C. Pal, 2020. "Negative Interest Rates," JRFM, MDPI, vol. 13(5), pages 1-12, May.

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