User:Nick Gardner /Sandbox: Difference between revisions

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Fortunately, increased bank lending is not necessary for Quantitative Easing to work. Indeed, it was precisely because the Monetary Policy Committee expected the additional monetary injection not to stimulate bank lending directly at the current juncture, that the Asset Purchase Facility’s purchases were targeted at assets held primarily by the non-bank private sector1. So if the Asset Purchase Facility buys gilts from pension funds or asset managers, they will then have to look for another home for their money. As it is not very rewarding just to hold it on deposit, they are likely to look to put their money into other assets, including equities and corporate bonds. Thus not only does the price of gilts rise as a consequence of the Asset Purchase Facility’s initial purchases, but also the prices of a whole spectrum of other assets. That in turn lowers the cost of non-bank finance and encourages increased corporate issuance. Also the rise in asset prices increases wealth and improves balance sheets. In this way, Quantitative Easing helps to work around the blockage created by a banking system that is still undergoing a process of balance sheet repair.
<ref>[http://www.boj.or.jp/en/type/ronbun/ron/wps/data/wp06e10.pdf Hiroshi Ugai: ''Effects of the Quantitative Easing Policy: A Survey of Empirical Analyses'', Bank of Japan, July 2006]</ref>
 
Shigenori Shiratsuka


<ref>[http://www.bankofengland.co.uk/monetarypolicy/framework.htm ''Monetary Policy Framework'', Bank of England, 2009]</ref>
<ref>[http://www.bankofengland.co.uk/monetarypolicy/framework.htm ''Monetary Policy Framework'', Bank of England, 2009]</ref>

Revision as of 12:08, 28 November 2009

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Shigenori Shiratsuka

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  1. ↑ Hiroshi Ugai: Effects of the Quantitative Easing Policy: A Survey of Empirical Analyses, Bank of Japan, July 2006
  2. ↑ Monetary Policy Framework, Bank of England, 2009
  3. ↑ Arzu Çetinkaya and' Devrim Yavuz'Calculation of the Output-Inflation Sacrifice Ratio: The Case of Turkey, The Central Bank of the Republic of Turkey, October 2002
  4. ↑ Laurence Boone and Benoit Mojon: Sacrifice Ratio in Europe: A Comparison of France, Germany, Italy and the U.K., (Available at SSRN) 1999
  5. ↑ Laurence Ball: What Determines the Sacrifice Ratio?, National Bureau of Economic Research, 1994
  6. ↑ Robert E. Keleher: Transparency and Federal Reserve Monetary Policy , United States Congress Joint Economic Committee, November 1997
  7. ↑ Federal Open Market Committee: Frequently Asked Questions, Federal Reserve Board, 2009
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