Discussion Paper Details

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Title: Macroeconomic Effects of Unconventional Monetary Policy in the Euro Area

Author(s): Gert Peersman

Publication Date: April 2011

Keyword(s): SVARs and unconventional monetary policy

Programme Area(s): International Macroeconomics

Abstract: I estimate the dynamic effects of respectively traditional interest rate innovations and unconventional monetary policy actions on the Euro area economy. The results show that the Eurosystem can stimulate the economy beyond the policy rate by increasing the size of its balance sheet. The ultimate consequences on output and consumer prices are however more sluggish compared to interest rate innovations. Furthermore, the transmission mechanism via financial institutions - very likely the risk-taking channel - turns out to be different.

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Bibliographic Reference

Peersman, G. 2011. 'Macroeconomic Effects of Unconventional Monetary Policy in the Euro Area'. London, Centre for Economic Policy Research.