Working Paper Revision

An Analysis of the Literature on International Unconventional Monetary Policy

Abstract: This paper evaluates the literature on international unconventional monetary policies (UMP). Introducing market segmentation, limits-to-arbitrage, and time-consistent policy in standard models permits a theoretical role for UMP. Empirical studies provide compelling evidence that UMP influenced international asset prices and tail-risk in the desired manner. Calibrated modeling and vector autoregressive (VAR) exercises imply that these policies also improved macroeconomic outcomes. We assess the recent debate on the empirical evidence and discuss central bank assessments of UMP. Despite qualified successes, we recommend that UMP be reserved for crises and/or when the zero bound constrains conventional monetary policy.

Keywords: unconventional monetary policy; effective lower bound; quantitative easing; event study;

JEL Classification: E51; E58; E61; F31; G12;

https://doi.org/10.20955/wp.2016.021

Status: Published in Journal of Economic Literature

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2020-05-04

Number: 2016-021

Note: Previous title [updated October 2018]: A Survey of the Empirical Literature on U.S. Unconventional Monetary Policy

Note: Publisher DOI: https://doi.org/10.1257/jel.20201493

Related Works

• Working Paper Revision: An Analysis of the Literature on International Unconventional Monetary Policy