Exploring the Nexus between Macro-Prudential Policies and Monetary Policy Measures: Evidence from an Estimated DSGE Model for the Euro Area

2013 ◽  
Author(s):  
Giacomo Carboni ◽  
Matthieu Darracq Paries ◽  
Christoffer Kok Sorensen
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Dsge Model ◽  
Policy Measures

scholarly journals Financialization and unconventional monetary policy: a financial-network analysis

2020 ◽  
Vol 30 (5) ◽  
pp. 1385-1428
Author(s):  
Chiara Perillo ◽  
Stefano Battiston
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Financial Stability ◽  
Banking System ◽  
Real Economy ◽  
Unconventional Monetary Policy ◽  
The Real ◽  
Recent Debate ◽  
Policy Measures ◽  
Net Flows

Abstract Over the last decades, both advanced and emerging economies have experienced the emergence of the phenomenon known as financialization, that, until some time ago, was generally considered beneficial for the economy. The 2007-2008 crisis and the severe post-crisis recession called into question the assumptions underlying the positive perception of the role played by financialization in the economy. In particular, the effects of financialization on financial stability and inequality are now widely recognized. A recent debate focused on the effectiveness of unconventional monetary policy tools in transferring their effects on the financial sphere to the economic sphere (e.g., via stimulating the transmission of resources from the banking system to the real economy). Among these unconventional policy measures, Quantitative Easing (QE) has been recently implemented by the European Central Bank (ECB). In this context, two questions deserve more attention in the literature. First, to what extent QE may generate net flows of additional resources to the real economy. Second, to what extent QE may also alter the pattern of intra-financial exposures among financial actors and what are the implications in terms of financialization. Here, we address these two questions by mapping and analyzing the euro area multilayer macro-network of financial exposures among institutional sectors across financial instruments (i.e., loans, bonds, equity, and insurance and pension schemes) and we illustrate our approach on recently available data. We then test the effect of the implementation of ECB’s QE on some novel measures of financialization that we derive from the time evolution of the financial linkages in the multilayer macro-network of the euro area.

scholarly journals Non-Standard Monetary Policy Measures – Magic Wand or Tiger by the Tail?

2013 ◽  
Vol 64 (3) ◽  
Author(s):  
Ansgar Belke
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Main Part ◽  
Asset Price ◽  
Unintended Consequences ◽  
Policy Implications ◽  
Magic Wand ◽  
Forward Guidance ◽  
Current Context ◽  
Policy Measures

AbstractThis paper briefly assesses the effectiveness of the different non-standard monetary policy tools in the Euro Area. Its main focus is on the Outright Monetary Transactions (OMT) Programme which is praised by some as the ECB’s “magic wand”. Moreover, it discloses further possible unintended consequences of these measures in the current context of weak economic activity and subdued growth going forward. For this purpose, it investigates specific risks for price stability and asset price developments in the first main part of the paper. It is not a too remote issue that the Fed does have a “tiger by the tail”, as Hayek (2009) expressed it, i. e. that the bank will finally have to accept either a recession or inflation and that there is no choice in between. Furthermore, it checks on whether the OMT programme really does not impose costs onto the taxpayer. Finally, it comes up with some policy implications from differences in money and credit growth in different individual countries of the Euro Area. The second main part of the paper assesses which other tools the ECB could use in order to stimulate the economy in the Euro Area. It does so by delivering details on whether and how the effectiveness of the ECB’s policies can be improved through more transparency and “forward guidance”.

scholarly journals Does Unconventional Monetary Policy Affect Bank Profitability in the Euro Area?

2020 ◽  
Vol 12 (1) ◽  
pp. 9
Author(s):  
Paolo Agnese ◽  
Paolo Capuano
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Euro Area ◽  
Unconventional Monetary Policy ◽  
Bank Profitability ◽  
Net Interest Margin ◽  
Policy Measures ◽  
The Impact ◽  
The Relationship ◽  
Interest Margin

This paper investigates the impact of unconventional monetary policy (UMP) on bank profitability in the euro area, over the period 2007-2019.In particular, through multiple regression models, we analyze the relationship between the UMP variables (Longer-term refinancing operations and Securities held for monetary policy purposes) and the main bank profitability variables used in the literature (Return on average equity, Return on average assets and Net interest margin).This work is original compared to recent studies on the subject as it considers the impact of UMP expressed in terms of volumes rather than in terms of interest rates on bank profitability variables.Our results suggest that the UMP adopted by the Eurosystem over the period considered is negatively associated with bank profitability expressed by the Return on average equity and the Return on average asset. By contrast, monetary policy measures do not seem to have had any effect on the Net interest margin. 

scholarly journals Playing with fire: the unintended consequences of monetary financing

2017 ◽  
pp. 247-257
Author(s):  
Leef H. Dierks
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Lower Bound ◽  
Euro Area ◽  
Balance Sheet ◽  
Unintended Consequences ◽  
Unconventional Monetary Policy ◽  
Monetary Policies ◽  
Policy Measures ◽  
Asset Purchases

To the extent that the ECB’s more recent monetary policies, among them cutting its main refinancing rate to a historical low of 0% in March 2016, failed to deliver the hoped for results in the wake of the financial crisis and the euro area started facing a “Japanifica-tion” (Dierks, 2015), unconventional monetary policy measures were adopted. These included unprecedented asset purchases, which caused the Eurosystem’s total assets to soar to €4.3trn (about 35% of Euro area GDP) as per mid-October 2017, the latest date for which data were available (fig. 1). Originally, these unconventional policy measures were designed to stimulate economic growth, particularly in the Medi-terranean Rim economies, and to spur inflation; “the (ECB’s) Gov-erning Council is more actively steering the size of the ECB’s balance sheet towards much higher levels in order to avoid the risks of too prolonged a period of low inflation in a situation where policy rates have reached their effective lower bound“ (ECB, 2014). In light of the most recent inflation data (fig. 2), this policy appears

Sign in / Sign up

Export Citation Format

Share Document