Flow Effects of Central Bank Asset Purchases on Sovereign Bond Prices: Evidence from a Natural Experiment

Santis, Roberto A. De; Holm‐Hadulla, Fédéric

doi:10.1111/jmcb.12665

Cited by 36 publications

(22 citation statements)

References 29 publications

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“…Most of the research on the influence and impact on inflation and other macroeconomic instruments such as; interest rates, unemployment, and gross domestic product (Ajah et al, 2020;Diamond, 2020;Perillo & Battiston, 2020;Ramkumar & Bates, 2020;Taghizadeh-Hesary et al, 2020). Min-Ho Nam concluded from his quantitative research that quantitative easing (QE) policies in developed countries such as the United States, Japan, Europe, and the United Kingdom have effectively helped lower inflation through the exchange rate channel, while if using trade channels the influence on inflation is insignificant (Bartkiewicz, 2020;Blattner & Joyce, 2020;De Santis & Holm-Hadulla, 2020;Tanaka, 2020;Ward, 2020). Other research shows that QE policy by the Fed has a significant influence on the financial sector in Indonesia (Pastpipatkul et al, 2015;Teguh&Andaiyani, 2019;Rizky, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

Quantitative Easing In Overcoming the Crisis: Criticism ofQeinthe Monetary System Of Capitalism

Et.al¹

2021

TURCOMAT

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This study aims to describe the form of Quantitative Easing applied by the Central Bank as well as qualitatively measure its benefits and excesses. To obtain a description and know the benefits and excesses in question, the research approach uses a qualitative approach by conducting a literature study of several facts and quantitative easing studies by Bank Indonesia and the Fed from various literature and media inductively relevant theories. This study's findings show that excesses can be detrimental to society, and countries that are shariah are harmful that should be avoided. This research is expected to encourage further research to determine the correlation of Quantitative Easing policy to the resolution of economic crisis and obtain alternative solutions by implementing the Islamic monetary system. The impact of the covid-19 pandemic that continues to this day causes economic shock, the slowing flow of goods commodities, decreased production, and decreased purchasing power of the community. Various policy efforts are carried out through fiscal stimulus as well as support through monetary policy in the form of quantitative easing.

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Section: Literature Reviewmentioning

confidence: 99%

Quantitative Easing In Overcoming the Crisis: Criticism ofQeinthe Monetary System Of Capitalism

Et.al¹

2021

TURCOMAT

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“…Эти эффекты распространяются на аналогичные виды активов в той степени, в которой инвесторы считают эти активы взаимозаменяемыми [22]. Снижение доходности облигаций вследствие мер, реализуемых в рамках политики количественного смягчения, также отмечается в работе [23].…”

Section: современные особенности монетарной политикиunclassified

Negative interest rates as a consequence of the transformation of monetary arrangements in modern economy: A literature review

Бурлачков

2020

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Subject. The article considers negative interest rates applied by both central and commercial banks on deposits and loans under conditions of significant changes in monetary arrangements of the modern economy. Currently, the number of central and commercial banks using such interest rates tends to increase. Objectives. The aim is to review theoretical and practical scientific studies on identifying the root causes of using the negative interest rates and the implications of this practice in the modern economy. Methods. The study involves methods of induction, deduction, synthesis, and comparative analysis. Results. The application of negative interest rates by central banks is aimed at stimulating the use of money (the banking sector liquidity) in central banks’ payment systems. The application of negative rates by commercial banks is related to the absence of commercial banks’ interest in using the deposits of business entities in conditions when the volumes of bank lending are restricted by Basel standards, i.e. by the Capital to Risk (Weighted) Assets Ratio (CRAR). Conclusions. Using the negative interest rates due to the specifics of the modern monetary arrangements cannot be characterized as an effective instrument of modern monetary policy implementation. Refusal to apply negative interest rates practices should be supported by effective coordination between the central bank money (the banking sector liquidity) and M1 money supply, which is formed as result of commercial banks’ credit transactions.

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“…An important caveat is that the ECB's first two government bond purchase programs were aimed at reducing risk premiums in countries under stress (Altavilla et al, 2016;Fratzscher et al, 2018). Indeed, the SMP and OMT were effective in reducing spreads among euro area member countries (Wafte, 2015), while the PSPP appears to have been effective in reducing yields across the euro area (De Santis and Holm-Hadulla, 2017).…”

Section: Is Europe Different?mentioning

confidence: 99%

“…(), Andrade et al . (), De Santis and Holm‐Hadulla (), Fic (), Eser and Schwaab (), Fratzscher et al . (), et al .…”

Section: The International Evidence To Date: Financial Marketsunclassified

A Survey of the International Evidence and Lessons Learned About Unconventional Monetary Policies: Is a ‘New Normal’ in Our Future?

Lombardi¹,

Siklos

Amand

2018

Journal of Economic Surveys

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This study examines the effectiveness of unconventional monetary policies (UMP). It considers whether these policies have been successful and where their effects remain uncertain. We survey both the domestic financial market and macro‐economic effects of UMP in the economies where these policies were introduced and their international spillover effects. The paper considers the impact of a wide range of UMP rather than the effects of specific policy instruments. We also provide a retrospective on the important case of Japan beginning in the late1990s and ask whether the Eurozone's experience with UMP is substantively different given its structure of policymaking. Finally, we ask: if the ‘old normal’ is not in our future, should the ‘new normal’ in monetary policy routinely include what we now refer to as UMP? We conclude that UMP can prevent economic collapse but are not designed to promote stronger long‐term economic growth. Apart from new communication strategies, the use of UMP under normal circumstances does not appear to be a sound monetary policy strategy. Failure to learn this lesson might also enable future policy makers to ask or expect too much from their central banks.

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Flow Effects of Central Bank Asset Purchases on Sovereign Bond Prices: Evidence from a Natural Experiment

Cited by 36 publications

References 29 publications

Quantitative Easing In Overcoming the Crisis: Criticism ofQeinthe Monetary System Of Capitalism

Quantitative Easing In Overcoming the Crisis: Criticism ofQeinthe Monetary System Of Capitalism

Negative interest rates as a consequence of the transformation of monetary arrangements in modern economy: A literature review

A Survey of the International Evidence and Lessons Learned About Unconventional Monetary Policies: Is a ‘New Normal’ in Our Future?

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