Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173461
Authors: 
Boneva, Lena
Cloyne, James
Weale, Martin
Wieladek, Tomasz
Year of Publication: 
2016
Series/Report no.: 
External MPC Unit Discussion Paper 47
Abstract: 
This paper investigates the effect of quantitative easing (QE) and other unconventional monetary policies on inflation and wage expectations of UK manufacturing firms. To identify the effect of QE on firms' expectations, we use a novel approach of combining microeconometric data with macroeconomic shocks: QE is exogenous to inflation expectations of individual firms, and so are other macroeconomic developments like aggregate inflation or GDP growth. We find that firms' inflation expectations increase by 0.22 percentage points in response to £50 billion of QE, implying that inflation expectations are part of the transmission mechanism of QE. In contrast, we find a positive but small and insignificant effect of forward guidance on inflation and wage expectations.
Subjects: 
Inflation expectations
firm survey data
unconventional monetary policy
quantitative easing
JEL: 
D22
E52
E31
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.