Quantitative easing in the eurozone

Marta Orviska, John Hudson

Research output: Contribution to journalReview article

Abstract

Quantitative easing (QE) is a new instrument of macroeconomic policy which if not born in the aftermath of the 2008 crisis, was at least nurtured by this crisis. The paper looks at both the history and the theory of QE. We then examine its impact, both positive and negative on the economy. The use of QE helped governments deal with the immediate aftermath of the crisis and possibly prevented much sharper recessions than we witnessed. But in many ways its impact on the real economy has been limited and there are dangers in both the potential for substantial inflation to occur at some point in the future and the weakening of the financial sector. We argue that much of the literature misses the point that QE is funding government debt and spending, at a time when fiscal policy is in a period of, perhaps temporary, decline. Finally, we discuss whether QE will be a permanent feature of macroeconomic policy in the future, or whether it will be resorted to only occasionally?

Original languageEnglish
Pages (from-to)143-159
Number of pages17
JournalInternational Finance Review
Volume18
DOIs
Publication statusE-pub ahead of print - 4 Aug 2017

Fingerprint

Euro zone
Quantitative easing
Macroeconomic policy
Government spending
Inflation
Funding
Fiscal policy
Recession
Government debt
Financial sector
Government

Keywords

  • Central banks
  • Inflation
  • Unconventional monetary policies

ASJC Scopus subject areas

  • Finance

Cite this

Quantitative easing in the eurozone. / Orviska, Marta; Hudson, John.

In: International Finance Review, Vol. 18, 04.08.2017, p. 143-159.

Research output: Contribution to journalReview article

Orviska, Marta ; Hudson, John. / Quantitative easing in the eurozone. In: International Finance Review. 2017 ; Vol. 18. pp. 143-159.
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