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Domestic and International Effects of the Eurosystem Expanded Asset Purchase Programme: A Structural Model-Based Analysis

Author

Listed:
  • Pietro Cova

    () (Bank of Italy)

  • Patrizio Pagano

    () (World Bank)

  • Massimiliano Pisani

    () (Bank of Italy)

Abstract

Abstract This paper evaluates the domestic and international macroeconomic effects of the Eurosystem’s Asset Purchase Programme (APP) by means of a calibrated three-country dynamic general equilibrium model of the world economy. We find that the APP boosts domestic inflation and economic activity as liquidity increases and long-term interest rates fall. International spillovers are expansionary, and their size depends on the monetary policy stance of partner countries and on the response of international relative prices.

Suggested Citation

  • Pietro Cova & Patrizio Pagano & Massimiliano Pisani, 2019. "Domestic and International Effects of the Eurosystem Expanded Asset Purchase Programme: A Structural Model-Based Analysis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(2), pages 315-348, June.
  • Handle: RePEc:pal:imfecr:v:67:y:2019:i:2:d:10.1057_s41308-018-0071-7
    DOI: 10.1057/s41308-018-0071-7
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    References listed on IDEAS

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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