Quantitative easing tilts the balance between monetary and macroprudential policy

End, Jan Willem van den

doi:10.1080/13504851.2015.1105913

Cited by 6 publications

(2 citation statements)

References 2 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…An opposing view is held by van den End (2016), who criticizes the position of the ECB and the Fed that price stability is the primary goal of monetary policy and quantitative easing (QE), whereas financial stability is secondary and addressed by macroprudential policy. Van den End (2016) in his paper argues that financial stability should not be separated from monetary policy as manifested through QE. A regression analysis for a set of eleven countries demonstrates that a decline in equity prices and an increase in corporate bond rates leads to a decrease in the inflation rate.…”

Section: Macroprudential Policy Versus Monetary Policymentioning

confidence: 99%

Macroprudential Policy Versus Other Economic Policies

Lorenčič

Festić

2021

CES

View full text Add to dashboard Cite

After the global financial crisis of 2007, macroprudential policy instruments have gained in recognition as a crucial tool for enhancing financial stability. Monetary policy, fiscal policy, and microprudential policy operate with a different toolkit and focus on achieving goals other than the stability of the financial system as a whole. In ligh of this, a fourth policy – namely macroprudential policy – is required to mitigate and prevent shocks that could destabilize the financial system as a whole and compromise financial stability. The aim of this paper is to contrast macroprudential policy with other economic policies and explain why other economic policies are unable to attain financial stability, which in turn justifies the need for a separate macroprudential policy, the ultimate goal whereof is precisely financial stability of the financial system as a whole. Our research results based on the descriptive research method indicate that, in order to prevent future financial crises, it is indispensable to combine both the microprudential and the macroprudential approach to financial stability. This is because the causes of the crises are often such that they cannot be prevented or mitigated by relying only on microprudential or only on macroprudential policy instruments.

show abstract

Section: Macroprudential Policy Versus Monetary Policymentioning

confidence: 99%

Macroprudential Policy Versus Other Economic Policies

Lorenčič

Festić

2021

CES

View full text Add to dashboard Cite

show abstract

“…By encouraging financial risk taking for instance, quantitative easing may contribute to financial imbalances and excessive asset price developments (Van den End, 2015). Since such effects may become manifest in the long run, they are particularly uncertain.…”

Section: Introductionmentioning

confidence: 99%

Fundamental Uncertainty and Unconventional Monetary Policy: An Info-Gap Approach

2017

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu ABSTRACT This paper applies the info-gap approach to the unconventional monetary policy of the Eurosystem and so takes into account the fundamental uncertainty on inflation shocks and the transmission mechanism. The outcomes show that a more demanding monetary strategy, in terms of lower tolerance for output and inflation gaps, entails less robustness against uncertainty, particularly if financial variables are taken into account. Augmenting the Taylor rule with a financial variable leads to a smaller loss of robustness than taking into account the effect of financial imbalances on the economy. However, in some situations, the augmented model is more robust than the baseline model. A conclusion from our framework is that including financial imbalances in the monetary policy objective does not necessarily increase policy robustness, and may even decrease it. Terms of use: Documents in EconStor may

show abstract