Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/169113
Authors: 
Michael, Bryane
Dalko, Viktoria
Year of Publication: 
2017
Abstract: 
What role does unconventional monetary policy – and particularly unconventional policies like private asset purchases under a quantitative easing or lender of last resort scheme – play in influencing economic growth directly? Emerging and developing countries’ central banks could contribute to GDP growth by following the example of jurisdiction like the US, UK and EU, by buying private sector and specific obligation public sector assets. Such a scheme would like most benefit jurisdictions like Greece, Bulgaria, Ukraine and others. Unsurprisingly, we find a weak relationship between these purchases and investment world-wide for the last 10 years. We also find the existence of a “sloth effect” – a pattern in the data whereby more central bank asset purchases actually coincides with lower investment. We estimate the gains to increasing central bank balance sheet sizes with these assets. We also show how statutory mandate for nominal GDP targeting set the best legal foundations for such asset purchases. We finally describe an internal audit engagement which would collect the specific data needed to verify the results in this study.
Subjects: 
unconventional monetary policy
funder of last resort
nominal GDP targeting
central bank balance sheet
sloth effect
internal audit
JEL: 
E58
E42
K23
O23
Document Type: 
Preprint

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