Quantitative easing, macroeconomic stability and economic policy effectiveness
Purpose: This study mathematically aims to evaluate the implications of a central bank’s adoption of a policy of quantitative easing (QE)/relative QE. Design/methodology/approach: It is shown, within an investment-savings (IS)-liquidity preference-money supply (LM) framework, that this policy prerogative has, depending upon the aggressiveness which QE is undertaken, demonstrable implications for the conditions under which macroeconomic stability exists. Findings: Furthermore, it is shown here that the presence of QE increases the effectiveness of traditional discretionary monetary and fiscal policies. Originality/value: The study shows, within an IS-LM framework, that this policy prerogative has, depending upon the aggressiveness which QE is undertaken, demonstrable implications for the conditions under which macroeconomic stability exists.
Year of publication: |
2021
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Authors: | Cebula, Richard ; Rossi, Fabrizio |
Published in: |
Journal of Financial Economic Policy. - Emerald, ISSN 1757-6385, ZDB-ID 2501029-3. - Vol. 14.2021, 4 (29.07.), p. 468-475
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Publisher: |
Emerald |
Saved in:
Online Resource
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