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Rooms for extension of the ECB’s quantitative easing programme

Author

Listed:
  • Christophe Blot

    (Observatoire français des conjonctures économiques)

  • Jérôme Creel

    (Observatoire français des conjonctures économiques)

  • Paul Hubert

    (Observatoire français des conjonctures économiques)

Abstract

The announcement of an extension of quantitative easing (QE) until March 2017, at least, has cast doubts on the strength of the Euro area recovery and it has raised concerns about the credibility of the ECB. In this contribution, we argue that the current design of QE prevents unlimited monetary accommodation and, meanwhile, it may reduce the effectiveness of QE. Extending QE again through a modification in its design is thus possible. It will be effective provided governments and the ECB are able to cooperate.

Suggested Citation

  • Christophe Blot & Jérôme Creel & Paul Hubert, 2016. "Rooms for extension of the ECB’s quantitative easing programme," Sciences Po publications info:hdl:2441/6tr1nod75s8, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/6tr1nod75s8ica439nb3qggf7q
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    File URL: http://spire.sciencespo.fr/hdl:/2441/6tr1nod75s8ica439nb3qggf7q/resources/february-2016.pdf
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    References listed on IDEAS

    as
    1. Ricardo Reis, 2013. "The Mystique Surrounding the Central Bank's Balance Sheet, Applied to the European Crisis," American Economic Review, American Economic Association, vol. 103(3), pages 135-140, May.
    2. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2015. "The QE experience: worth a try?," Sciences Po publications info:hdl:2441/4qb2og10r48, Sciences Po.
    3. Seok Gil Park, 2015. "Central Banks' Quasi-Fiscal Policies and Inflation," International Journal of Central Banking, International Journal of Central Banking, vol. 11(2), pages 199-236, March.
    4. Woodford, Michael, 1994. "Monetary Policy and Price Level Determinacy in a Cash-in-Advance Economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(3), pages 345-380.
    5. Sims, Christopher A, 1994. "A Simple Model for Study of the Determination of the Price Level and the Interaction of Monetary and Fiscal Policy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(3), pages 381-399.
    6. Del Negro, Marco & Sims, Christopher A., 2015. "When does a central bank׳s balance sheet require fiscal support?," Journal of Monetary Economics, Elsevier, vol. 73(C), pages 1-19.
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    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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