Bringing credibility back to macroeconomic policy frameworks

Stephen Anthony*, Hamid Yahyaei

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

For most of the past decade, unconventional monetary policies (UMPs) have affected the wealth of savers, renters and younger generations. These policies, which enlarge central bank balance sheets – supporting credit expansion in the economy – but have no reliable mechanism for reversal, raise the simultaneous risk of higher inflation and deflation. In this paper, we critique UMPs by drawing on extant literature and empirical data that elucidate the undesired economic effects they cultivate. In particular, we focus on the implications of UMPs on efficient portfolio holdings by proposing an intuitive ex-ante measure of dynamic efficiency loss that has applications for future research.

Original languageEnglish
Pages (from-to)276-295
Number of pages20
JournalEconomic Papers
Volume41
Issue number3
DOIs
Publication statusPublished - Sept 2022

Keywords

  • financial markets
  • macroeconomic policy
  • quantitative easing
  • unconventional monetary policy

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