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Monetary Transmission via the Central Bank Balance Sheet

  • Stefan Behrendt

    ()

    (Friedrich Schiller University Jena, School of Economics and Business Admistration)

This paper estimates the effects of unconventional monetary policies on consumer as well as asset price inflation, economic activity and bank lending at the hand of a VAR analysis, covering episodes of balance sheet policies of 9 countries over the last 20 years. While recent episodes of unconventional monetary policies have been extensively analysed, this paper reduces deficiencies about long-run implications following central bank balance sheet policies in Scandinavian countries, Australia in the 1990s and Japan in the early 2000s. Results of this study are that balance sheet policies, in response to a collapse of asset price bubbles, can ensure a short run stabilisation of economic activity but are not able to lift the economy out of the ensuing deflationary slump alone. Additionally, they do not pose severe problems associated with inflation, as laid out in several theories such as the static monetarist interpretation of the quantity theory of money, or towards newly created asset price bubbles.

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File URL: http://pubdb.wiwi.uni-jena.de/pdf/wp_hlj49-2013.pdf
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Paper provided by Friedrich-Schiller-University Jena in its series Global Financial Markets Working Paper Series with number 49-2013.

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Date of creation: 27 Nov 2013
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Handle: RePEc:hlj:hljwrp:49-2013
Contact details of provider: Web page: http://www.gfinm.de

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  3. Co-Pierre Georg & Markus Pasche, 2008. "Endogenous Money - On Banking Behaviour in New and Post Keynesian Models," Jena Economic Research Papers 2008-065, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, revised 01 Oct 2008.
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  17. Hiroshi Ugai, 2006. "Effects of the Quantitative Easing Policy: A Survey of Empirical Analyses," Bank of Japan Working Paper Series 06-E-10, Bank of Japan.
  18. Sugo, Tomohiro & Teranishi, Yuki, 2005. "The optimal monetary policy rule under the non-negativity constraint on nominal interest rates," Economics Letters, Elsevier, vol. 89(1), pages 95-100, October.
  19. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, August.
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  23. Baumeister, Christiane & Benati, Luca, 2010. "Unconventional monetary policy and the great recession - Estimating the impact of a compression in the yield spread at the zero lower bound," Working Paper Series 1258, European Central Bank.
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