Perils of quantitative easing

《Perils of quantitative easing》由会员上传分享，免费在线阅读，更多相关内容在学术论文-天天文库。

1、PerilsofquantitativeeasingMichaelMcMahonHeraklesPolemarchakisUniversityofWarwickUniversityofWarwick&CEP,LSENovember10,2011AbstractSincethenancialcrisisbegan,therehasbeenasignicantshiftfromconventionalmonetarypolicytounconventionalmeasuresoftencalledquantitat

2、iveeasing".Whilethereisalargeliteratureexamininghowtheinteractionofmonetaryandscalpolicyaectsthedeterminacyofprices,inthisworkweconsiderpriceleveldeterminacyunderquantitativeeasing.Weshowthatconventionalmonetarypol-icyoperationsintheformofinterestratepolicytha

3、tisconductedusingrisklessassetsleadstodeterminacyofthepriceleveldespiteRicardianscalpolicyandastochasticenvironment.Ontheotherhand,ifmonetarypolicyisconductedinamannerakintoquantitativeeasing,weshowthatanindeterminacyariseswhichreducesthecentralbankscontrolofin

4、 ation.Keywords:Quantitativeeasing;monetarydeterminacy;in ationexpectations.JELCodes:E52WewouldliketothankseminarparticipantsatYale,11thSAETConference,SWETandCore,Louvainforhelpfulcomments.WearealsogratefultoClareMacallanforsharingthedatathatunderliesthein atio

5、nexpectationgures.McMahonthanksTomSmithformanyusefuldiscus-sionsonin ationoptions.Anyerrorsremainourown.Correspondingauthor:MichaelMcMahon(m.mcmahon@warwick.ac.uk).1IntroductionTheexistenceofasingle,determinateequilibriumsolutionaroundwhichtheeconomy uctuatesis

6、consideredahighlydesirablecharacteristicofanymodeldesignedtoevaluatedierentpolicyrules.Wicksell(1936)comparesadeterministicsolutiontoapendulumwhich,whendisturbedfromitsrestingplace,willgraduallyreturntoitsstartingposition;acylinderrestingona at,slightlyroughsur

7、facehasnosuchforcesactingonittoreturnittoaparticularrestingplaceonceitisdisturbedandsocanbethoughtofanindeterminateequilibrium.Policieswhichdonotruleoutindeterminatepricesolutionsshouldberecommendedwithgreatcautionasthesewouldleadtothelossofpolicycontrolandprice

8、sandin ationexpectationswouldbecomedeanchored.Inthelastfouryears,centralbanksinmanycountrieshaveshiftedfromconventionalmonetarypolicy(thesettingofinterestratesbackedb