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Cash is King - Effects of ECB's Conventional and Unconventional Measures

Author

Listed:
  • Martin Baumgaertner

    (THM Business School)

  • Jens Klose

    (THM Business School)

Abstract

In this paper we distinguish the responses of conventional and unconventional monetary policy measures on macroeconomic variables, using a high frequency data set which measures the impact of the ECB's monetary policy decisions. For the period 2002:01 to 2019:06 we show that unconventional and conventional monetary policy measures dffer considerably with respect to inflation. While conventional measures show the expected response, i.e. an interest rate cut increases inflation and vice versa, unconventional measure appear to have no signicant influence. But this holds not for QE, which is found to have similar influence on inflation as conventional interest rate changes.

Suggested Citation

  • Martin Baumgaertner & Jens Klose, 2019. "Cash is King - Effects of ECB's Conventional and Unconventional Measures," MAGKS Papers on Economics 201923, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:201923
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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/paper_2019/23-2019_baumgaertner.pdf
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    More about this item

    Keywords

    Unconventional Monetary Policy; High-Frequency Data; ECB;
    All these keywords.

    JEL classification:

    • 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
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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