What are the macroeconomic effects of asset purchases?

Martin Weale, Tomasz Wieladek, 10 June 2014

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After policy rates fell close to zero in response to the global financial crisis of 2008-09, the scope for further conventional monetary policy easing was exhausted. As a result, both the Bank of England and the Federal Reserve embarked on large-scale asset purchases of government and financial securities (see Figures 1 and 2).

Topics: Monetary policy
Tags: Bank of England, Federal Reserve, inflation, output, Phillips curve, quantitative easing, unconventional monetary policy

Disagreement about inflation expectations: The case of Japanese households

Shusaku Nishiguchi, Jouchi Nakajima, Kei Imakubo, 2 May 2014

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It is well known that inflation expectations vary across agents. Nevertheless, this fact has attracted little attention. Analysis of inflation expectations typically tend to focus on measures such as the mean and the median of such expectations. One of the distinguished exceptions is Mankiw et al.

Topics: Monetary policy
Tags: inflation, inflation expectations, Japan

Is the Phillips curve alive and well after all? Inflation expectations and the missing disinflation

Olivier Coibion, Yuriy Gorodnichenko, 15 November 2013

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“Prior to the recent deep worldwide recession, macroeconomists of all schools took a negative relation between slack and declining inflation as an axiom. Few seem to have awakened to the recent experience as a contradiction to the axiom.” (Bob Hall, 2013.)

Topics: Global crisis, Monetary policy
Tags: disinflation, expectations, global crisis, Great Recession, inflation, oil, Phillips curve

Independent monetary policies, synchronised outcomes

Espen Henriksen, Finn Kydland, Roman Šustek, 2 October 2013

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The recession in the Eurozone has given new life to optimal-currency-area thinking. The argument goes that the disadvantages of a single currency come from the loss of flexibility and ability to use monetary policy to respond to “asymmetric shocks” (Krugman and Obstfeld 2009).

Topics: Exchange rates, Monetary policy
Tags: capital controls, Central Banks, EMU, exchange-rate policy, inflation, monetary policy

Why is housing such a popular investment? A new psychological explanation

Thomas Alexander Stephens, Jean-Robert Tyran, 23 November 2012

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In the wake of the economic crisis that began in 2007, homeowners in many countries have faced substantial losses. Prices have fallen in both nominal and real terms. In the US, for example, house prices in the first quarter of 2012 were down more than 40% in real terms from their peak (Shiller 2012). Nevertheless, housing remains a popular investment1.

Topics: Global economy
Tags: house prices, housing, inflation

The housing market and the case for higher inflation targets in the US and the Eurozone

Joshua Aizenman, Menzie D. Chinn , 15 May 2012

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The eloquent advocacy for moderate inflation at times of peril goes back to Irving Fisher’s seminal paper on the debt deflation:

Topics: Macroeconomic policy, Monetary policy
Tags: Eurozone crisis, housing market, inflation, US

ECB inflation-fighting powers remain intact

Christian Thimann, 30 March 2012

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In a recent Vox column, Aaron Tornell and Frank Westermann (2012) argue that with the conduct of three-year liquidity operations, the ECB has “hit a limit in its ability to prevent an acceleration of inflation”.

Topics: EU policies, Europe's nations and regions, Monetary policy
Tags: ECB, Eurozone crisis, inflation

Has the ECB hit a limit?

Aaron Tornell, Frank Westermann, 28 March 2012

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In December, the ECB successfully forestalled a financial crisis by stepping in with a big bazooka and inundating the market with liquidity. Unfortunately, the big bazooka has come at a cost; the composition of the ECB’s balance sheet has changed dramatically.

Topics: EU policies, Europe's nations and regions, Monetary policy
Tags: ECB, Eurozone crisis, inflation

Financial repression: Then and now

Carmen M Reinhart, Jacob Funk Kirkegaard, 26 March 2012

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In light of the record or near-record levels of public and private debt, debt-reduction strategies are likely to remain at the forefront of policy discussions in most of the advanced economies for the foreseeable future (Reinhart and Sbrancia 2011).

Throughout history, debt-to-GDP ratios have been reduced by:

Topics: International finance, Macroeconomic policy
Tags: debt, financial repression, inflation

Shock ‘n’ oil

Marco Annunziata, 18 March 2012

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Oil prices (Brent) are up 14% since the beginning of the year. How bad is this, and how bad can it get? The consensus so far is that this is mostly a demand-driven move rather than a supply shock: after the gloom of Q4, data and news flow have been encouraging, with better than expected activity figures in the US, progress on the Eurozone-crisis front, and resilience in China’s economy.

Topics: Energy
Tags: inflation, natural resources, oil

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