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Title:The lessons from QE and other "unconventional" monetary policies: Evidence from the Bank of England PDF Logo
Authors:Lyonnet, Victor
Werner, Richard A.
Issue Date:2011
Series/Report no.:CFS Working Paper 2011/29
Abstract:This paper investigates the effectiveness of the quantitative easing policy, as implemented by the Bank of England in March 2009. Similar policies had been previously implemented in Japan, the U.S. and the Eurozone. The effectiveness is measured by the impact of Bank of England policies (including, but not limited to QE) on nominal GDP growth - the declared goal of the policy, according to the Bank of England. Unlike the majority of the literature on the topic, the general-to-specific econometric modeling methodology (a.k.a. the Hendry or LSE methodology) is employed for this purpose. The empirical analysis indicates that QE as defined and announced in March 2009 had no apparent effect on the UK economy. Meanwhile, it is found that a policy of quantitative easing defined in the original sense of the term (Werner, 1994) is supported by empirical evidence: a stable relationship between a lending aggregate (disaggregated M4 lending, i.e. bank credit for GDP transactions) and nominal GDP is found. The findings imply that BoE policy should more directly target the growth of bank credit for GDP-transactions.
Subjects:Central Banking
General-to-specific Methodology
Monetary Policy
Nominal GDP Growth
Quantitative Easing
JEL:E41
E52
E58
Persistent Identifier of the first edition:urn:nbn:de:hebis:30:3-241110
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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