Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/180915
Authors: 
Lehment, Harmen
Year of Publication: 
2018
Series/Report no.: 
Kiel Working Paper 2107
Abstract: 
The large Public Sector Purchase Programme (PSPP) which the ECB started in 2015 on the basis of monetary policy purposes, had major side-effects on fiscal policy. One concerns the programme's uncommon seigniorage effects. We find that the PSPP not only led to partly negative seigniorage gains, but also produced super-seigniorage gains resulting from negative interest rates on the excess reserves which have been created by the programme. Another effect of the PSPP is its interference with fiscal debt management, thereby making fiscal budgets more vulnerable to changes in short-term interest rates. We also find that the experience with the PSPP suggests that fiscal policy should prepare for a greater role in fighting future recessions.
Subjects: 
central bank asset purchases
seigniorage gains
debt management
monetary-fiscal cooperation
JEL: 
E5
E6
H6
Document Type: 
Working Paper

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