Discussion paper

DP8348 Macroeconomic Effects of Unconventional Monetary Policy in the Euro Area

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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Citation

Peersman, G (2011), ‘DP8348 Macroeconomic Effects of Unconventional Monetary Policy in the Euro Area‘, CEPR Discussion Paper No. 8348. CEPR Press, Paris & London. https://cepr.org/publications/dp8348