Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261107 
Year of Publication: 
2021
Series/Report no.: 
CASE Reports No. 504
Publisher: 
Center for Social and Economic Research (CASE), Warsaw
Abstract: 
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance. This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Subjects: 
COVID-19 pandemic
monetary policy
forced saving
monetary overhang
quantitative easing
inflation
fiscal dominance
JEL: 
E31
E41
E51
E52
E58
E62
E63
F62
H62
H63
ISBN: 
978-83-7178-718-8
Document Type: 
Research Report

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